CS pension- buying added pension v paying AVCs

[WSCamp]

I am thinking about buying added pension in Alpha.

Current CS pension is £19k. I can buy an added £2k a year within my annual allowance and would do so up to the limit of £9.6k. My aim is to increase my pension to £33k over the next few years (through added pension and basic) and then take early retirement (funded through ISA savings and a small DC pension I have).

The alternative would be not to buy added pension or buy less and pay AVCs to increase my DC pension.

My instinct is that added pension is better for me- DH has a large DC pension and we have other investments and cash. We'll also have full state pensions in time (assuming they don't become means tested). Having a decent DB pension is going to provide certainty (against inflation and longevity risk) and allow us to push our other investments harder. Grateful for any views on this.

I’d be interested in people’s thoughts on this too.
I thought the maximum was 12*£1,200 =£14,400.00 per year.
I’malso not sure how you work out how much you can contribute to AVC /SIPP in one year.
I’ve heard that the amount you add to the DB CS pension through normal monthly contributions and Added pension does NOT count - so, you can add up to your annual salary (up to max of £60k pa).
But also heard you need to take into account the difference in annual worth of the pension - this is made hard as I don’t have access to that info with the CS pension portal having no info just yet.
It’s really difficult to get a clear answer.

For annual allowance, it's basically value at end of year (inc increase for CPI) less value at start of year (with notional increase for CPI) x 16. So if you start the year with a £10k pension and end with £12k (through your ordinary Alpha contribution and/or added pension), that's treated as £32k of your annual allowance. I think 😭

@WSCamp two things to factor in your decision making.

You CS pension is paid index linked this means when you take your pension each April it is normally increased by September CPI. For example this April my pension will go up by 3.8%. Will your AVCs also give you an index linked pension?

From memory Alpha allows you to buy added pension but also allows you to pay extra so iyour pension is paid in full (no reduction) 1,2 or 3 years early but not before age 65. If you know you want to take your pension early it is worth costing out if this is an additional option.

Being in Alpha is a no-brainer but buying added pension (or EPA) is much harder to judge, as it’s relatively expensive. With average returns and inflation you would probably do better with AVCs (which you could of course then use to buy an index linked annuity if you wanted). However average returns and inflation are not a given, whereas the CS pension is.

I can definitely see the argument for taking the expensive, risk-free route here to let you take more risk on investments.

EPA and added pension essentially do the same thing- you can either pay more to retire earlier or to increase your pension, but the rates mean that if you retired early with added pension and without EPA your reduction would put you in the same position as if you’d chosen EPA instead, and vice versa if you chose EPA and then didn’t retire early. The benefit of EPA is that it doesn’t use up your annual allowance.

The MSE pension board is great for questions on CS pensions- there are some real experts on there.