Partial retirement from civil service advice
Comments
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Assuming that you are enrolled in Classic then I can see absolutely no benefit at all in deferring taking the pension. There are no "increments" for deferral to age 67 or whatever, so any pension foregone is pension lost - forever. Even if the taxman ends up taking his slice, you are still better off. And, or course, you can take steps to mitigate the tax penalty. I had a friend who took the partial retirement option a couple of years ago and she has never looked back. She went down to 18.5 hours a week and, because she didn't pay NI or superannuation on the pension element, she ended up being marginally better off month on month. Her only problem was that her bosses and colleagues took a while to mentally accept that she had halved her hours and she ended up getting work equivalent to 3 or 4 days for quite a while. Great person that she was and with 40 years of public service ethic behind her she just found it too hard to say no!0
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Seem to have caused a bit of a stir?
We all make our career choices and I made mine.
All I want is what was agreed when I took the job.
I would point out that I will have done 27 years in the civil service this year and will get about 8k per annum pension, plus lump sum.
Prior to that I spent 16 years in retail and the pension I have from that will pay more than my civil service pension, when I can draw it at 65.
The civil service pension is not exactly "gold plated"as some seem to think.0 -
Hi
AFAIK you effectively start a new employment contract, so all your history and benefits etc may be lost.
You old 5 day post is terminated and your pension benefits are released in full.
Your new 3 day contract starts and you are a fresh employee, and can join a pension scheme for the relatively short time you are still there.
Perhaps the employment contract may just be varied to a shorter working week, but it may not. Things like long service awards, extra leave entitlement, sick pay etc are lost and gone for ever.
However you work 3 days a week, have a large lump sum in the bank and get paid a pension. The tax and NI will probably be lower on earnings etc so that you have time and money for a better life.
IT DOES need careful thought and a negotiation with the employer, but can be beneficial.
OP most of the above is complete rubbish.
The poster has no idea what he is speculating about, he is guessing and is guessing wrong.
Reducing your hours with any employer changes your contract of employment but it does not mean that you lose the benefits you have unless you agree to a new contract. In the CS, this would reduce your annual leave pro-rata, but your service would be continuous and he would retain any rights related to length of service. Explicitly, you do not leave the pension scheme under PR.Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.0 -
I am 60 in May and considering changing from 5 to 3 days a week from September and taking my pension. I am in the classic scheme.
Can anyone advise please?
Will I loose out on my final retirement amount if I work over 3 years before finally retiring?
Am I able to leave the lump sum until final retirement?
Thanks in advance.
Dixy, partial retirement in civil service is not a right but needs employer approval.
Say you have earned a pension of £20K and a Lump Sum of £60K and that your salary is £40K at the age of 60 after 40 years work.
Partial retirement is a change in your employment contract not a new contract. It is just the same in many respects as changing to working part time.
So say you decide to take 50% of your pension at 60 (20 years). You get paid £10K of pension and a lump sum of £30K. The rules require that you reduce your salary by at least 20% which this would achieve.
If you did take 50% of your pension you would have a pension of £10K. If you then worked 2.5 days a week you would earn £20K in salary.
After partial retirement your income would be £20K+ £10K (ie £30K). You would still have a 20 year pension and this would continue to grow so after another year you would have 20.5 years of pension to take.
For PR there are lots of options. For example you could work at a lower grade or take any number of years of pension up to the number you have earned. But you must reduce your salary by 20% and the value of your pension plus salary cannot be more that your current salary (otherwise it is abated - ie confiscated by the Crown).
When you reach your actual retirement age, you continue to receive your pension in payment which is increased by CPI each year and you will also get the remaining pension. So say you worked 4 years in the above example you would get a further 22 years pension at 64 and a three times that as a lump sum. That would be based on your final salary at that age.
As far as I am aware you cannot defer the lump sum if you take part of the pension (you can convert it to more pension but that is not a good deal). You do not lose any pension by PR in fact the more you take now the sooner it will increase by CPI rather than salary.
But PR is only an option if you can persuade your employer that you can do your job part time (not all jobs can be done part time).
So you need to work out what your pension is at 60 and take as much as you can of it commensurate with the reduction in hours you can justify.Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.0 -
It looks to me as if retiring at 60 is another benefit to the public sector whilst us have to wait to access all our pension is for me anyway 65 ...................someone like to enlighten me whats fair about that !! And yet the public sector contribute sweet FA into our pensions whilst we help fund theirs
Life is seldom fair, but we all make choices. Some choose not to contribute to a pension, some to contribute 5%, some to contribute more than that. Its the same in the private sector as the public: you contribute and in return get benefits. If you want them earlier you can take them but they do get reduced to take them earlier than the scheme planned to pay them.
Many public and private schemes enabled staff to retire at 60. Those who have joined such schemes more recently do not get to retire at 60, the current public sector schemes are based on retirement at the State Retirement Pension Age. The OP is in an old scheme and was close enough to retirement age for the changes not to affect them. Someone below 50 now will have to work until 66, 67, 68.
The public sector workers buy goods and services that your employer produces. The profits on them contribute to your pension.
Public sector employers use your taxes to pay for public sector pensions. Public sector employees now contribute more to those pensions and yes taxes pay for the rest. If they did not then they would have to pay more salary to get people to work for the public sector.
If you choose to earn more in the private sector and accept that your employer pays less towards your pension than is done in the public sector, there is no point in moaning about it when you have benefited from the higher pay but get less pension benefits.
I grant you many in the private and public sector did not realise how much a public sector pension is worth, but making digs at the expense of public sector workers will not make them work any harder.
Personally, I have been self employed for years and have been paying about 20% of my earnings into a pension fund. I realise that not all people choose to do this.Friend of mine worked in the civil service years said the new employees are told dont look out the window in the morning otherwise you will have nothing to do in the afternoon.
Meanwhile us lot in the private sector working 55 hours pw week plus then getting stopped £400 in tax to help fund your take the money and run pensions at 55
Well you would only get £400 taken per week in tax if you were earning enough to pay it. Of course you could pay some of that income into a personal pension and pay a lot less tax on it if you choose to do it. Has that never occurred to you? Or like Jamesd you could invest the money tax free in VCTs.
How much tax do you think is fair to pay? How much would you want to pay to have a GP and a hospital or roads built for example?Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.0 -
Assuming that you are enrolled in Classic then I can see absolutely no benefit at all in deferring taking the pension. There are no "increments" for deferral to age 67 or whatever, so any pension foregone is pension lost - forever. Even if the taxman ends up taking his slice, you are still better off. And, or course, you can take steps to mitigate the tax penalty. I had a friend who took the partial retirement option a couple of years ago and she has never looked back. She went down to 18.5 hours a week and, because she didn't pay NI or superannuation on the pension element, she ended up being marginally better off month on month. Her only problem was that her bosses and colleagues took a while to mentally accept that she had halved her hours and she ended up getting work equivalent to 3 or 4 days for quite a while. Great person that she was and with 40 years of public service ethic behind her she just found it too hard to say no!
Fair comment. The main problems are that you only change your hours once, the change is permanent, you cannot earn more in pension plus salary than you did at the time of PR (apart from increases due to inflation protection of the pension and changes to the part time salary) otherwise pension is abated, and strictly if there are overtime opportunities this extra pay should also be abated. The main issue is whether the job can be restructured to a reduce number of hours (and the expectations of colleagues).
But entirely agree, OP should take as much pension as possible in view of stated policies on civil service pay for the next few years.Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.0 -
There is a vast difference in choosing and been able to pay more into a pension fund. And public sector get a far higher percent paid by the employer than we do in the private sector i get miserly 5% paid by my employer i gather in public sector its round the 12% or more point.Which as ive said is been paid by the tax payer on both sides.0
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Those in private sector DC schemes might also get more than 12% from taxes, depending on how the scheme is set up.
I certainly do get more than 12% of my pay in pension contributions from taxes because of my high salary sacrifice rate, over 60% of pay. Easy enough for the income tax and NI savings on that level to do the job. Assume say 30% average income tax saved by me and about 10% NI average on 60% of pay and that's 24% of my pay in lost tax and NI revenue. The real number is probably higher than that.
I'm pretty extreme but it shows what can be done. I don't pay much income tax on the rest either, courtesy of my VCT and maybe soon EIS buying and the tax relief on those.0 -
There is a vast difference in choosing and been able to pay more into a pension fund. And public sector get a far higher percent paid by the employer than we do in the private sector i get miserly 5% paid by my employer i gather in public sector its round the 12% or more point.Which as ive said is been paid by the tax payer on both sides.
Most Public Sector employers contribute on average more that 12%. The point is it is part of employment package. The Government choose to accept the risk of paying such pensions in return for paying a lower salary for comparable work from current budgets. The private sector pays more in salary for a comparable job but gives less employer contributions to their pension fund.
If you accept a job that pays 5% into your pension it is your choice how much of your salary to contribute to a pension. Ultimately the pension you get will be determined by what your employer and you pay into it. People need to realise that if we want pensions that are 50%+ of salary we need to contribute at least 20% of earnings to a pension fund over their working life, whoever pays it. My mate is always complaining about public sector pensions but he chooses a new car every three years, takes expensive holidays and has updated his kitchen three times in the past 15 years. One needs to prioritise.
I do believe that Final Salary Pensions (public or private) are generous and favour the better paid. But they are dying out and pensions based on average career earnings or a personal pension fund are fairer. But like a lottery, the only way to win is to buy a ticket.Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.0 -
Dixy, partial retirement in civil service is not a right but needs employer approval.
Say you have earned a pension of £20K and a Lump Sum of £60K and that your salary is £40K at the age of 60 after 40 years work.
Partial retirement is a change in your employment contract not a new contract. It is just the same in many respects as changing to working part time.
So say you decide to take 50% of your pension at 60 (20 years). You get paid £10K of pension and a lump sum of £30K. The rules require that you reduce your salary by at least 20% which this would achieve.
If you did take 50% of your pension you would have a pension of £10K. If you then worked 2.5 days a week you would earn £20K in salary.
After partial retirement your income would be £20K+ £10K (ie £30K). You would still have a 20 year pension and this would continue to grow so after another year you would have 20.5 years of pension to take.
For PR there are lots of options. For example you could work at a lower grade or take any number of years of pension up to the number you have earned. But you must reduce your salary by 20% and the value of your pension plus salary cannot be more that your current salary (otherwise it is abated - ie confiscated by the Crown).
When you reach your actual retirement age, you continue to receive your pension in payment which is increased by CPI each year and you will also get the remaining pension. So say you worked 4 years in the above example you would get a further 22 years pension at 64 and a three times that as a lump sum. That would be based on your final salary at that age.
As far as I am aware you cannot defer the lump sum if you take part of the pension (you can convert it to more pension but that is not a good deal). You do not lose any pension by PR in fact the more you take now the sooner it will increase by CPI rather than salary.
But PR is only an option if you can persuade your employer that you can do your job part time (not all jobs can be done part time).
So you need to work out what your pension is at 60 and take as much as you can of it commensurate with the reduction in hours you can justify.
Thanks for the comments. I have got my line managers support and am going to apply on Monday to cut my hours. If accepted I will be able to apply for my pension to kick in from when the new hours start.0
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