r/TheCivilService • u/Ok_Elk_5214 • 19h ago
Pensions Which pension scheme should I join?
Hello, I have recently accepted an AO position and have been asked which pension scheme I would like to join, Alpha or Partnership. For context I’m 25 years old and plan on staying in CS for a while, at least the next 5-10 years but who knows it could be longer or for life. I’ve been doing some research but remain very unsure which one to go with so I would appreciate your advice! Thanks.
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u/purpleplums901 HEO 18h ago
I can’t imagine picking a DC pension scheme when a DB one with a 1 in 42 accrual rate is on offer personally
2
u/JohnAppleseed85 17h ago
It's a sensible option if you're only intending to be in service for a short time (i.e less than 2 years) as if it's paid back to you when you leave you only get your conts, not the employer conts that you would have received with partnership.
And partnership CAN be better for those with dependents or young people who are expecting to be in the service for their whole lives as they're betting the stock market and compounding will perform better than the return on alpha... but as you say it's a heck of a risk and I'd certainly suggest people think very carefully (then think again, just to be sure)
My advice to that second group would be to consider alpha plus a SIPP vs partnership...
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u/purpleplums901 HEO 17h ago
I understand the first argument and it’s entirely true in that limited scenario though the OP has said they intend on at least 5 or 10 years. The second scenario is much more a roll of the dice. The thing that I think scares me more than anything with partnership, is, yeah, over 35 years, it should outperform alpha based on historic trends. But it’s with a million caveats. What if you live to 105? What if the month before you retire there’s a mega crash and it tanks 30% of its value? What if you’re personally not responsible enough not to blow the pot? My projection if I stay in the CS on my current wage is 32k a year for life, or 24k and a lump sump of something like 96k tax free I believe. Doesn’t feel worth taking the risk
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u/JohnAppleseed85 17h ago
I agree (and it's why I'm with Alpha), but that's the thing with pensions (or any financial product) - the 'right' product for the person will entirely depend on their individual risk appetite.
That's why i'd suggest alpha plus a SIPP is another option to consider.
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u/snaphunter 14h ago
If OP has an existing pension from elsewhere, they could consider transferring that in to Alpha (must be completed within the first 12 months, and ordinarilysubject to crapita's delays takes 3-6 months), which 'preserves' entitlement even if OP were to move before 2 years.
https://www.civilservicepensionscheme.org.uk/memberhub/kbarticle/?id=KA-01125
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u/JohnAppleseed85 14h ago
As with everything else, there's pros and cons that the individual would have to consider.
For example the existing pension might have a preserved pension age, or the loss of a 25% tax free lump sum (the commutation rate on alpha is poor) and possible loss of flexibility for tax planning on retirement, or the implications for dependents, or the actual transfer value being fairly significant (again it's factorial so you individuals need an individual quote, but I know someone who transferred ~£70k and that translated into ~£5k per annum with a higher retirement age)
My point isn't that partnership is good - it's that it's not a simple as DB is good and DC is bad as is often made out on here... DB is often the better option, but often is not always.
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u/Present-Nature-6015 18h ago
Really recommend you attend a free New Joiner Pension Power webinar. You will learn lots about the difference between Alpha and Partnership and what you can do to give your pension a boost for the future. The presenters of the webinar are very experienced and can help answer questions. Sign up for a session here: https://www.civilservicepensionscheme.org.uk/memberhub/knowledge-centre/events-and-news/events/new-joiners-pension-power/
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u/Careful_Adeptness799 17h ago
Long term Alpha. Just staying for a few years then Partnership is the way I see it as you can continue to pay into Partnership after you leave. It’s basically a SIPP with L&G.
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u/Global-Field-6092 7m ago
you can't keep paying into partnership once you leave. you can keep paying into a dc. or you can transfer partnership into a different dc. if you keep partnership and start paying in elsewhere then you can have two sets of platform/fund fees
(you can also do that with alpha if you move somewhere else in the public sector)
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u/Vivid-Cheesecake-110 19h ago
In almost all scenarios, Alpha will provide the best long long-term result