Advice on Nuvos civil service pension

Nadeshka

Hello, I'm looking for advice on the Nuvos scheme (or I suppose any scheme with very similar terms and conditions).
I'm in a bit of an unsual situation: I took a gap year and worked for 12 months at the Science Museum, so while I was there I was enrolled in the Nuvos scheme and made contributions of about £600, with my employer putting in about £2000 (according to my rough payslip figures).
So in September I started university and stopped working full time - but switched to a zero-hours contract, so essentially I can go back and do some work now and again.

What this means is although I don't work there I'm still considered in the scheme - no contributions have been made since but they haven't sent me any notification of leaving and tell me my options (which their website says would have happened within 2 months.)

So I'm wondering what exactly my options are? I think that if I leave it there till this September then it passes a two year deadline and I cannot get my contributions back (until retirement that is!) - Is this correct?

If I do get them back it'll be less costs etc so I know I'll only get about half back anyway (and only the money I contributed) - only £300 or so.
Since there's more in there than I can get out I was wondering if there's any benefit in keeping it as a pension? I obviously don't know if I'll work with an civil service employer who's on the scheme after uni, so would I be able to transfer the money into another scheme?
And if not could I make payments into it of my own?

Essentially do I keep this as a start to a pension (at 19 yikes!!) or just claim back my contributions - can I even do this if I haven't officially left the scheme?
Any advice at all would be appreciated.

Andy_L

If you leave it there it will increase by RPI every year until you retire. If you rejoin the CS, either the same of a different department, it will increase by RPI every year until you retire.
You could transfer it into another scheme, without getting quotes it's impossible to say if it's worth doing, my gut feeling (which is in no way advice :-) ) is that it isn't.

taliesin

Andy L's reply isn't entirely clear to me, so (without, I think, disagreeing) let me offer a response ...

I work in an organisation similar to the Science Museum and have several people in my office whose situation is similar to Nadeshka's. Nuvos is the new Civil Service pension scheme. It is of similar value to the older ("Classic" and "Premium") schemes but much better suited to modern careers. Instead of your pension being determined by your salary at the time you retire, each year's contributions are grossed up to form the final pension. My own pension is in the older "Classic" scheme, so I haven't looked at the details of the Nuvos scheme as closely, but there is lots of information on the Civil Service pensions website at http://www.civilservice-pensions.gov.uk/scheme_information/nuvos.html. By the way, it's worth remembering that these schemes don't only provide a pension for you in later life; they also provide some benefits for your dependents in the event of your early death.

In my view, it would be madness to throw away the £2000 the Museum has already contributed to your pension fund, plus half of your own contributions, in return for just £300 in your hands now. If you earned £18000 in the year you worked (I think that should be quite close to the real figure), those contributions will earn you the future equivalent value of £300 today, each and every year when you get to draw your pension. You have 30-40 years' working life to generate your pension -- even if you do earn more later, and find yourself able to contribute even more in future years, this is a good start. Looking at this from the other end of a career (and as someone who wasn't able to start accumulating pension contributions until age 30, so had to do a lot of catching up), I would strongly urge you to hold on to this.

You can keep it in the Museum's scheme (which appears to be the main "Principal Civil Service Pension Scheme" itself) or, if you join another civil service or near-government body, as Andy L says, you can move it to their version of the Nuvos scheme on identical terms. There are fair arrangements for moving contributions between the civil service and most other (e.g. local) government schemes (look up "Public Sector Transfer Club" if you want to find out about this). It's even possible to move contributions to some schemes outside the public sector on Transfer Club terms. As Andy L says, it's impossible to say whether any transfer would be worth doing without a quotation. Like Andy L, my gut feeling is that any transfer outside Transfer Club terms is unlikely to be worthwhile. You would most likely be best off simply leaving those contributions to pay out when you get to pension age.

It is possible to make limited additional voluntary contributions (up to £5000 in the current year) as long as you are an "active member" of a civil service scheme. It rather looks like you are an active member whilst you have your "zero-hours" contract but if you were to interested in this, you would be well advised to make enquiries with the Museum's personnel office as soon as possible. It wouldn't surprise me if any contributions were also limited to some fraction of your actual earnings. It won't be possible to make additional contributions once you have left the scheme. Also, cash contributions to the civil service schemes are now calculated on an actuarial basis, so the terms won't be as good as the "added years" of the classic scheme were.

You can't get your contributions back without leaving the scheme, but if you wanted to do that, the Museum's personnel office may allow you to tear up the zero-hours contract, leave the scheme and undertake any further work on a "casual" contract basis. Again, I think this would be very short-sighted.

Good luck!

newfoundglory

I have just started a new Civil Service job - about 3 weeks ago. I too have been put on Nuvos. January pay showed nuvos deduction, but not any employer contribution details.

I am actually really confused about whether this is a good scheme or not. I couldnt find anywhere in the booklet exactly what the contributions of the employer were... only that I would pay in 3.5%

I am 24, and not sure whether I should go with the other scheme which is stock-market linked? I have been working for about 3 years and dont have any previous pensions....

taliesin

This is worrying, not least because several of my own recent recruits have asked me the same question. It seems that the information handed out to new joiners about civil service pensions isn't as clear as it should be.

Nuvos, like the older civil service schemes, is not covered by a cash fund. It's a "defined benefit" scheme and represents a commitment by the employer (ultimately the government) to pay out. The value of that benefit can only truly be known once all of the beneficiaries have passed on, which means that the current value of the scheme (or, putting it the other way round, the government's debt to them) can only be estimated, albeit quite well, actuarially.

Recent estimates that I have seen (edit: see below) have put the value of the scheme to employees at around or a little above 20% of the relevant salary. Given that the contribution rate is 3.5%, that puts the value of the employer's "contribution" at 17% or so. I am told there are some very unusual circumstances (for example, involving working and staying overseas) in which it makes sense to pursue the "partnership" (investment) scheme, but as the employer contribution to that is just 3%, the 14%+ additional "contribution" usually makes the decision to go with one of the civil service schemes a "no-brainer". In your case, newfoundglory, Nuvos is the only one that is open to you.

Again, you may find the Civil Service Pension website helpful http://www.civilservice-pensions.gov.uk/scheme_information/nuvos.html. I usually refer my recruits to their Union representative - PCS/Prospect/... - for a second opinion and you may like to talk to yours.

Edit: http://www.civilservice-pensions.gov.uk/facts_and_figures.html gives details of the "accruing superannuation liability charge", in effect the employers contribution. It varies between 17.1% and 25.5% according to salary level. A charge of 0.8% must also be taken to cover benefits for those joining the partnership scheme, and that needs to be subtracted to give a fair estimate of the difference in values. In other words, the employing department accepts a liability of between 16.3% and 24.7% of the employee's salary to cover the Nuvos pension scheme benefits instead of paying over 3% to the commercial company operating the partnership scheme.

newfoundglory

Thanks... that makes more sense!

Nadeshka

Thanks for the help! I'm just about all clued up on most work/tax issues but pensions still leave me a little lost at the moment (especially since my partner who joined 3 months before me is on a different scheme and received different advice).
This has definitely confirmed things for me - I was loathe to 'lose' £2000 of my employer's contributions and half my own, but there's the whole 'a bird in the hand is worth two in the bush.'
I'm in no desperate need of the £300 right now, whereas I'm sure the money will be a lot more useful at retirement age - especially if I get that equivalent amount each year (you were correct, my salary was about 18000 inc London allowance etc).
There's also the very real possibility that I go back to a proper contract in the long holidays or straight after I graduate to tide me over till I found something else, which would up the amount in there I presume.
Thanks again. :T

gmbunn

Folks,

Im sorry to ask such a dumb question but Im about to start a job with the Nuvos pension option, yet even though ive read the booklet about 10 times I still dont understand how the pension side of it works!

For example i get that 3.5% is my contribution, of which only 2.3% will go in to the 'pot', as the remainder plus the empolyer contribution "goes toward the cost of providing the pension and benefits".

Ok so that makes sense, BUT, in this case lets say i work 20 years on a salary of 25k (just as an example). At the end of this period I'd be left with about 11-12k in the pension pot. (I know RPI needs to be added too, but it isnt a great amount).

How is this figure then used to work out what I would get as a pension? and for how many years will it be paid? Surely 12k would last 1 year, but not an entire pensionable life?

Any advice here would REALLY help me out!

Thanks all

gmbunn

Andy_L

Answered on your other thread :-)

sunnyboyjim

So i've been trying for ages to get in touch with my previous employer to get the !!!! into gear and send details back about my pay so I can get the contributions back from my nuvos pension, i was there for about 15 odd months. No reply, so I rang them myself, and I was informed that the case was 'open' and they had emailed someone about the pay details last week. When I rang today they said the same thing, but the woman said, 'you are aware this is a lengthy process''.

How long have people generally got their contributions back? I thoughT i would get a letter, but i left mid march. If I knew that it would have been this much hassle I would have just but a standing order and saved that money aside!!