What is EPA?
In alpha, your normal pension age is the same as your state pension age. Without EPA, if you chose to claim your pension before your normal pension age, it would be reduced - See section 4 of the alpha scheme guide - as it may be paid to you over a longer period of time.
EPA allows you to pay more on top of your normal pension contributions to build up an EPA portion of your alpha pension. This can be paid one, two or three years before your normal pension age, without any early payment reduction.
How it works
- you pay for an EPA portion of your alpha pension by making extra contributions on top of your normal pension contributions
- you don’t pay contributions to your standard alpha pot and your EPA pot at the same time, an EPA is set up as a separate payment arrangement
- the EPA portion of your pension can be taken without reduction one, two or three years before your alpha normal pension age (depending on the option you choose) but not before age 65
- you can only buy one EPA portion at a time, but over the course of your scheme membership, you can change which option you are buying, and build up another EPA portion under one of the three available options
- if your state pension age changes so will your normal pension and EPA age. For example, your state pension age is 67 and you’re buying an EPA for two years to retire at 65; if the state pension age and alpha normal pension age is moved to 68 your EPA will also move one year to 66
- each year the EPA portion of your pension you have built up is adjusted in line with prices, at the same rate as the main alpha pension
Buying your EPA
An EPA can only start at the beginning of the pension scheme year (1 April).
Applications should be submitted after 1 January of the year in which contributions will commence. Applications submitted before then will not be considered.
The EPA application form can be found here.
If you want to buy an EPA that will build up from your start date, you must apply within the first three months of joining alpha.
This means that you will have some backdated EPA contributions to pay the first time they are taken from your salary. We will explain how the backdated contributions will be collected during the application process.
When you buy an EPA, you will pay an additional EPA contribution for a minimum of 12 months. You can’t cancel the EPA part way through a scheme year.
The amount you pay will vary, depending on:
- which EPA option you choose
- your age
- how long you have to build it up
These contributions get tax relief in the same way as your normal alpha contributions. Your payroll will normally apply the tax relief for you.
Use the EPA estimator tool to see how much the extra contributions will be for the different EPA options.
The cost of buying an EPA is fixed each scheme year, but will change from year to year. We will automatically renew your EPA and write to you each year to tell you what your contributions will be for the following 12 months.
Cancelling your EPA
When you choose one of the EPA options, you are agreeing to continue your payments until the end of the pension scheme year (31 March).
If you do not want to continue EPA in the following scheme year, you can cancel the arrangement by completing the EPA cancellation form. The form must be submitted before 31 March.
We will review your form and contact your employer/HR Connect to stop the EPA contributions. Your employer/HR Connect should contact you to confirm the contract has ended.
If you cancel your EPA, you will stop paying the EPA contributions at the end of the scheme year, and return to only paying the ordinary alpha contributions to build up a pension that can be paid in full at your alpha normal pension age.
If you stop adding to the EPA portion of your pension it is held on your record alongside your main alpha pension. You can re-apply and start adding to this EPA portion of your alpha pension again at a later date.
Leaving the pension scheme
If you leave the pension scheme, your EPA contributions will stop immediately on the day you leave. You keep the EPA portion of your pension that you have built up, unless you are leaving with less than two years’ service. You can then choose to have your pension, including your EPA, refunded, or to transfer them to your new pension scheme.
If you have bought the maximum amount of alpha added pension, you cannot buy an EPA. If you buy an EPA, this will affect how much added pension you are able to buy in the future.
Death benefits or Ill-health
If you buy an EPA, it does not affect the pension benefits payable to your dependants if you die - See alpha scheme guide section 6
Buying an EPA has no effect on the way the death benefit lump sum is calculated - See alpha scheme guide section 6
If you retire through ill-health, the EPA portion of your pension has no effect on how your benefits are worked out, or the age used in the tests by the scheme medical advisers. They will use your state pension age.
They will still check to see if you will be able to return to employment by your normal pension age, not the age you could take the EPA portion of your alpha pension.
For more information, see section 02C of the alpha scheme guide.