Alpha is very similar to the current RCPS Nuvos scheme. Alpha is based on your pensionable earnings with the normal scheme pension age being linked to the State Pension Age. This means if the State Pension Age changes so will your Alpha scheme pension age.
Cabinet Office introduced Alpha in April 2015 and have published a number of guides explaining the scheme and its benefits in more detail. The Alpha guide - external link - can be viewed on the Civil Service Pensions website.
2.32% of your pensionable earnings are used to create your pension. Each year 2.32% of your earnings are added to your Alpha pension. For example, one year of pensionable earnings of £20,000 will give an annual Alpha pension of £464 at State Pension Age. Every year your accrued Alpha pension is subject to a cost of living adjustment, this can be negative or positive.
The chart below illustrates how an Alpha pension builds up:
How your pension is built up
The cost of living adjustment is assumed to be positive for this illustration.
When you access your Alpha pension you have the option of exchanging some of your annual pension to create a tax free pension lump sum. You have the ability to increase your retirement income by buying Added Pension or making additional voluntary contributions (AVCs). There is also an option of buying an Early Pension Age (EPA) for a portion of your Alpha pension, which enables you to claim part of your Alpha pension early without reduction. Alpha also provides a number of other benefits such as death benefits and ill health retirement.
The minimum pension age for Alpha is 55. If you claim it before your normal pension age it will be reduced for early payment. If you take your Alpha pension after your normal pension age a late payment supplement is added.
Employee pension contributions for Alpha are identical to the existing contribution rates and based on the same pay bands. These contributions are subject to change.
What happens to your accrued RCPS pension?
When you are enrolled into Alpha your accrued RCPS pension is preserved. The way this works depends on whether you are in one of final salary schemes; Classic, Classic Plus and Premium, or in Nuvos.
Classic, Classic Plus and Premium (final salary) members
When you're enrolled into Alpha you cease to accrue any more reckonable service towards your final salary pension, and the service becomes preserved. Your final salary element is still linked to your pay at time of leaving, not at the time you are enrolled into Alpha. You still retain the right to access your final salary based benefits at age 60. To do so you would need to leave employment at age 60, or partially retire accessing some or all of your final salary benefits. Alternatively you may decide to continue working past age 60 until State Pension Age and access both your final salary and Alpha benefits at the same time.
Nick is 45 and has accrued 15 years' reckonable service in Premium up till 31 March 2018. Nick's State Pension Age is 67. Nick is enrolled into Alpha on 1 April 2018 and begins to build up Alpha pension benefits. Nick works for another 15 years and at age 60 decides to retire. The Premium element is based on pay as at time of retirement (not pay as at 1 April 2018). The Alpha element can be accessed at age 60 but will be reduced because of early payment; alternatively Nick can defer accessing the Alpha element until age 67.
When you are enrolled into Alpha what you have accrued in Nuvos becomes 'banked' and will continue to be adjusted each year in with inflation (using the Consumer Price Index - CPI). You retain the right to access your Nuvos benefits at age 65. To do so you would need to leave employment at age 65, or partially retire accessing some or all of your Nuvos benefits. Alternatively you may decide to continue working past age 65 until State Pension Age and access both your Nuvos and Alpha benefits at the same time. If you access Nuvos after age 65 it is increased for late payment.
Delilah is 47 and has been in Nuvos since 2010 and has a State Pension Age of 66. Delilah is enrolled into Alpha on 1 April 2018 and begins to build up an Alpha pension, her Nuvos benefits are banked. Aged 65, Delilah decides to retire and access all of her pension benefits. The Nuvos element is paid in full whereas the Alpha element is reduced because it is being paid a year early. Delilah could have worked on to State Pension Age which would mean the Alpha element is paid in full; this would mean the Nuvos element is increased for late payment.
Please note these are selected examples from a number of possibilities. Other options may be applicable if you partially retire, have transferred in service / pension from another provider, when you become a member of the RCPS, when you leave the scheme / leave employment and when you decide to access your benefits.
© JSS 2018
Last updated: 12 Oct 2016