Buying Added Years - Civil Service Pension Scheme

elephant_guy

Mrs Elephant Guy is a member of the Civil Service Pension Scheme.
She has remained within the 'Classic' option of the scheme following the changes introduced a few years ago. She has 18 reckonable years service, 9 years Full Time and the last 9 years being part time, working 25 hours a week. If she continues working she will have accrued 40 years service at age 65 (9 yrs Full Time, 31 years Part Time).

She currently earns below £30,000 and has recently been paying £100 per month into the in house Civil Service Stakeholder Pension with Standard Life. She had previously been paying in quite a bit more than £100 and the Stakeholder Pension is currently valued at £12,000.

We are interested in finding out whether it would be possible to buy added years to reduce the age at which Mrs EG retires.

How much would added years cost and would it be the most beneficial way to make provision for when she wishes to hang up her trunk? Sorry !! :doh:

We have contacted the relevent civil service pay office and they appeared to be completely confused by the fact that Mrs EG was part time AND currently paying into a stakeholder pension.

Anyone cast any light on this apparently confusing conundrum ?

Andy_L

Morning

Do you know this link : http://www.civilservice-pensions.gov.uk/Menu.asp

To confuse the issue Mrs EG, when part time, acrues years at her pro-rata rate ie (currently) 25/37s of a full-time year per part-time year & so has 14 years &, on her planned career would get 30.9 years. However the pension is then based on her equivalant full-time earnings so she won't loose out.

She can buy extra years subject to the 15% Inland revenue max contributions (may change after A-Day) & not going over 40 years service AT THE AGE OF 60 (current rules are NRA of 60 - may well change) so consider carefully if she's going to go back to full time in the future. The cost (either as a lump sum or %age of salary) depends on years left to 60 & doesn't seem to be on the website.

BUT (always a but) added years have the same retirement age (currently 60) as the rest of her pension. So to retire before then means either:
Actuarially Reduced pension (since you will draw the pension longer)
Being retired early with no reduction as an alternative to redundancy
Asking nicely & being allowed to go early with no reduction.

Although if she's happy to go at 60 rather than the 65 you said that's not an issue & would have 26.5 years service acrued & could buy (up to) 13.5 added years (subject to the 15% limit)

Andy