Civil Service Pension - no more lump sum, what to do?

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  • Annie_SW
    Annie_SW Posts: 69 Forumite
    I opted for the Classic pension, but the bit I really don't understand is why all the fuss and potential industrial action is about working til 65 ? I'd rather work until 65 than have my pension mucked about and no doubt reduced.
  • unspec
    unspec Posts: 47 Forumite
    Annie_SW wrote:
    I opted for the Classic pension, but the bit I really don't understand is why all the fuss and potential industrial action is about working til 65 ? I'd rather work until 65 than have my pension mucked about and no doubt reduced.

    Actually if they kept everything about my Premium pension the same, and just changed the retirement age to 65 I'd be quite happy. However it's the supposedly cost neutral move from a final salary based pension to a contribution based one that I find infuriating. If that part of the proposed change is cost neutral, why was it going to be forced onto Civil Servants rather than voted on?

    Regardless of the changes, I think and new pension should be for new applicants only. It's not fair to change a system people are already in, at the very least new entrants would be able to go in with their eyes open.
  • Annie_SW
    Annie_SW Posts: 69 Forumite
    That's it exactly. I'd assumed I was going to be working to 65 anyway.

    If it's being forced on us regardless it can only be to our disadvantage.
  • isasmurf
    isasmurf Posts: 1,999
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    unspec wrote:
    However it's the supposedly cost neutral move from a final salary based pension to a contribution based one that I find infuriating.
    It's not moving to a contribution based scheme. Its moving from a final salary to an average career salary scheme. As far as I understand it, contributions will remain the same as they are now.

    I chose to remain in Classic for one simple reason, because there was the huge clause in the Premium scheme that stated that the increased contribution level of 3.5% of pay could be increased in the future. Classic contributions would remain fixed. However, having just read the consultation document it seems that there is an option for all schemes to have increased contribution rates should costs increase.

    The change in the age limit I am not bothered about. Most government departments now allow people to work up to 65 if they want to, and most people take this option up. Perhaps this is not the case in the NHS or with teachers. Interestingly the proposals suggest that those working after 65 could get a bigger pension in the future.

    What I would be concerned with is the change from Final Salary to Average Salary. On the face of it, it does look fairer, but without seeing the forumla for working out your pension I don't know if I would've been worse off or better off.

    If I remained in the Civil Service then I can see very little, other than the proposed increase in pension contributions to worry about here. The unions and the sheep that are members of the unions should see the bigger picture here.
  • If for example you work for 5 years, you will have 5 mini pensions, each one based on that year's pensionable income. Each mini pension will be uprated each year in line with inflation. That immediately makes it a worse deal than a career average system which is uprated in line with earnings. And even for people whose stay at the same grade throughout their careers that looks liek a worse deal than the present system where the final salary pension is in effect linked to earnings increases.
  • unspec
    unspec Posts: 47 Forumite
    Sorry when I said contributions based I meant every year your contributions go into a pot, your final pension is based on the size of that pot.

    I'm no accountant! :)

    Whatever you call it, I'd come off worse and I'm very angry that the Governmant is trying to force it onto us.


    EDIT: I thought those under the current Classic scheme cannot go over the 40 year limit? The move to a retirement age of 65 might not benefit those who max out the pension before then...
  • unspec
    unspec Posts: 47 Forumite
    isasmurf wrote:
    If I remained in the Civil Service then I can see very little, other than the proposed increase in pension contributions to worry about here. The unions and the sheep that are members of the unions should see the bigger picture here.

    Of course, if the proposed changes went through in 2013 you wouldn't be on the Classic pension. ;)
  • Luis
    Luis Posts: 637 Forumite
    Having only joined in September last year, I only had the choice of the premium or a Stakeholder, and felt the Premium option to be better - as a new entrant, I did not have the option of classic. Classic appears to have a lower contribution rate, automatic lump sum and works on 1/80ths - Premium works on 3.5% contributions, Optional lump sum and 1/60ths.

    My partner is still on classic (although slightly miffed at having joined just after Fresh Start), but his pension looks set to be changed in 2013 too. We had both looked forward to the abilty to retire earlier as our profession is very demanding.

    I think my main gripe is the uncertainty about what is happening. Plus how to adequatley fund my retirement! AVCs or extra savings seem to be the order of the day - but not until I get up the ladder a bit and can afford to put more by.
    "It was not my intention to do this in front of you. For that, I'm sorry. But you can take my word for it, your mother had it comin'."

    Overlord for the Axis of Evil (part time) :D
  • pippppster
    pippppster Posts: 12 Forumite
    The Labour government has, typically, taken the soft option.

    Britain has a public sector pension bill which is spiralling out of control, but the government are too spineless to tackle it.

    Equitable Life could only honour its promises to GAR policyholders by shafting all the non-GAR members.

    Similarly, with interest rates rising in the US, and the economic outlook worsening here and in the US, the government will only be able to honour its public sector pension pledges by shafting taxpayers...those non-public sector workers who actually create the wealth to pay public sector pensions.

    Make the most of your "premium" or "classic" public sector pensions.........the tide is turning
  • unspec
    unspec Posts: 47 Forumite
    pippppster wrote:
    The Labour government has, typically, taken the soft option.

    Britain has a public sector pension bill which is spiralling out of control, but the government are too spineless to tackle it.

    Equitable Life could only honour its promises to GAR policyholders by shafting all the non-GAR members.

    Similarly, with interest rates rising in the US, and the economic outlook worsening here and in the US, the government will only be able to honour its public sector pension pledges by shafting taxpayers...those non-public sector workers who actually create the wealth to pay public sector pensions.

    Make the most of your "premium" or "classic" public sector pensions.........the tide is turning

    The funny thing is that most people I've talked to aren't too bothered about the move from 60 to 65 for the retirement age. It's the averaged salary change that is the big issue - and that's supposedly a cost neutral move.

    Plus, I'm a taxpayer too ;)
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