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

SapphireFlames

I have no intention of working until I am 60 (or even 65 as it looks like it is going to be, yuk), and want a decent pension on which to retire.

OK, so you want a decent, taxpayer-subsidised pension, but you don't want to work for as long as the rest of the UK population has to?! Do you realise how entitled you sound?

Paul_Herring

SapphireFlames wrote: »

I have no intention of working until I am 60 (or even 65 as it looks like it is going to be, yuk), and want a decent pension on which to retire.

OK, so you want a decent, taxpayer-subsidised pension, but you don't want to work for as long as the rest of the UK population has to?! Do you realise how entitled you sound?

Well when you selectively quote them like that then, yes, it does sound rather like that.

Perhaps you should take into account the rest of a post before replying to it?

I too, have no intention of waiting until I'm (at the moment) 67 before retiring - and I don't work in the public sector.

MPatterson

My wife has just transferred out of her public sector pension scheme, many people dont realise they can do this. So please be aware, it could be very worthwhile.

As annuity rates are very very low, the transfer value was higher than we expected. The risk of staying in the scheme, and the rules changing and getting lower benefits (as our friend a nurse has found out this year) in the future is worrying. Her choices came down to wanting to have some flexibility, and pass on her fund to her sister as she is likely to outlive me. The choice came down to an income drawdown plan, she can choose how much income she takes. I had to agree with her thinking, as it doesnt make sense to pay more tax than is necessary, either income tax or on death. We used thepensiondrawdowncompany after a long time looking through her choices. I hope the government do back down but you cant trust a politician !

Mike

dunstonh

My wife has just transferred out of her public sector pension scheme, many people dont realise they can do this. So please be aware, it could be very worthwhile.

The stats for that being best advice are around 1% of cases. You wouldnt bet on those odds.

fairleads

MPatterson wrote: »

As annuity rates are very very low, the transfer value was higher than we expected. The risk of staying in the scheme, and the rules changing and getting lower benefits (as our friend a nurse has found out this year) in the future is worrying. Her choices came down to wanting to have some flexibility, and pass on her fund to her sister as she is likely to outlive me.

In which case its highly probable that your wife will belong to that elusive 1% who benefit from the proactive action.

cecil123

I think I will look into AVCs as suggested - I am afraid I am a bit of a boring old Hector in that I would rather plan and economise now in order to enjoy the free time I may have when I retire and enjoy life - if I don't burn out before then

bigfreddiel

MPatterson wrote: »

My wife has just transferred out of her public sector pension scheme, many people dont realise they can do this. So please be aware, it could be very worthwhile.

As annuity rates are very very low, the transfer value was higher than we expected.

Mike

your wife must be bonkers - basically my public sector pension will be about £9k pa plus a lump sumof £27k - for that I pay £65/month - thats the new increased rate.

now with these low annuity rates - only going to get lower i would need a fund of about £300k - now how long is that going to take to build up at £65/month?

i wont insult your intelligence by nswering that but i don't think i would be around to enjoy it.

and one other point - don't forget the public sector pnsion increases with inflation (albeit cpi) and when i die my spouse still gets half - that probably means you will need more like a £400k fund to buy an equivalent annuity

good luck - let us all know how it goes.

fj

BobQ

MPatterson wrote: »

My wife has just transferred out of her public sector pension scheme, many people dont realise they can do this. So please be aware, it could be very worthwhile.

As annuity rates are very very low, the transfer value was higher than we expected. The risk of staying in the scheme, and the rules changing and getting lower benefits (as our friend a nurse has found out this year) in the future is worrying. Her choices came down to wanting to have some flexibility, and pass on her fund to her sister as she is likely to outlive me. The choice came down to an income drawdown plan, she can choose how much income she takes. I had to agree with her thinking, as it doesnt make sense to pay more tax than is necessary, either income tax or on death. We used thepensiondrawdowncompany after a long time looking through her choices. I hope the government do back down but you cant trust a politician !

Mike

It would be interesting if you could post the evidence that this was such a good option. It seems absolutely barmy but you might be one of the 1% to which dunstonh refers.

bigfreddiel

MPatterson wrote: »

My wife has just transferred out of her public sector pension scheme, many people dont realise they can do this. So please be aware, it could be very worthwhile.
Mike

more reasons why its a bad idea to opt out of a cs pension- from their own site:

Opting out of the Civil Service pension arrangements for classic members (OPT2)

This fact sheet provides important information for you to read if you are thinking about opting out of (leaving) the Civil Service Pension
arrangements.
Opt out and miss out
If you are thinking of opting out of the Civil Service Pension arrangements, please remember that you will be missing out on:
- a range of valuable benefits for you and your family;
- an important part of your pay and reward; and
- the peace of mind that comes from knowing you are planning for your retirement.

It may be that your reasons for wanting to opt out include one or more of the following:
- I don’t want to pay a percentage of your pay towards a pension;
- I’m too young to think about a pension.

If so, please read on.........

I don’t want to pay a percentage of my pay towards a pension

In classic your contributions actually cost you less than the contribution rate because of tax relief. If you opt out of the scheme you will be put in the State Second Pension Scheme (S2P) and this will mean that you and your employer will pay higher rate National Insurance contributions.

I’m too young to think about a pension
You’re never too young to start building up a pension – the earlier you start the better.

If you want to enjoy “life after work”, a pension that has built up over your working life could be the key to helping you achieve this.
More......
Further information

Please see our web pages and read the scheme booklet “classic pension scheme” for further information on the valuable benefits
offered by the Civil Service pension arrangements. This booklet is available on our website (https://www.civilservice.gov.uk/pensions) or from
MyCSP.
Please think very carefully before making your decision and consider taking independent financial advice to help you make the right
choice.
If you still decide you wish to opt out of the Civil Service Pension arrangements completely, you should complete the opt out form from
the CSP website and send it to MyCSP. Alternatively, you can contact MyCSP. They will send you further information and a
declaration form for you to complete to confirm your decision.
If you do not know MyCSP’s contact details please visit the website and look under Helplines or ask your employer. Once MyCSP
receives your signed form, your opting out will take effect from the next convenient pay period.
But remember – if you opt out you will miss out.
This fact sheet provides information to help you think about the consequences of opting out. Neither this fact sheet nor the
booklets referred to cover every aspect. The full details are contained only in the rules, which are the legal basis of the scheme.
You should note that nothing in this fact sheet can override the rules, and in the event of any unintentional difference, the rules will
apply.
MyCSP MAR 2012

laurel7172

This is LGPS, not civil service, but most of my accrued benefits are on the 1/60 system (no lump sum) and I've just had a letter encouraging me to pay AVCs which includes the following:

When you retire you can take the whole of your AVC fund as a tax free lump sum (including any income earned) subject to the total lump sum being no more than 25% of the value of your benefits.

So am I right in my interpretation that if I make AVCs, this could be the best of all possible worlds? Tax relief, tax free growth AND the whole of it back when I retire?

Thank you