Civil Service pension options - which one to choose?

MascaraMinx

I have always had a non-contributory pension so haven't had to worry myself with the details. I am now moving jobs to the Civil Service and I received their pension choices booklet. I am very confused and I wonder if anyone can help me decide which one to go for? I have 6 years worth of pension to transfer in to the scheme. I don't pay contributions now, so ideally I would like that to continue (at least until I am a bit older and my mortgage is a bit smaller!). However, I can't tell what would be the sensible thing to do!

Anyone know about Civil Service pensions can help me??

MascaraMinx

Hello, I have read through the Civil Service sticky above and added my questions to that thread. Would anyone who knows about Civil Service pensions please take a look and see if they can help? i am loathe to fork out for an IFA but I may have to at this rate!

Hereward

What are the options that they offered you?

isasmurf

In the sticked thread you are stating that you are transferring between departments. I'm fairly sure that as long as you are not leaving the civil service you should be able to remain in the classic scheme.

Have you spoken to the pension administrators of your old department? They should be able to explain what your options are and answer some of your questions, but they won't be able to advise what you should do.

, I have to choose from Premium or Partnership. This is my first time trying to understand pensions, so I don't really "get" what contracting out means, what an annuity is, the implications this has for my the State pension, and how risky a Stakeholder pension is. I have read through this thread and the booklet I got, and I am more confused than ever. I also don't understand whether I should be transferring my old Classic pension across to this new one, or just leave it.

As well as your Basic State Pension, you get a 2nd State Pension based on your earnings. By contracting out, you forego the 2nd State Pension but in return you pay less National Insurance. Other then this there should be no implications to your State Pension.
How risky a Stakeholder Pension is entirely dependent on what types of investment/funds you invest in.

Andy_L

The best option is to contact the PCSPS & get an answer direct from the horses mouth, you should have the number in the booklets they sent you.

However:
http://www.civilservice-pensions.gov.uk/scheme_information/joining/transferring_previous_pension_funds/premium.aspx
" I have a frozen pension from when I worked in the Civil Service before. What happens to that?

You can either leave your earlier pension preserved (frozen) or you can aggregate (join up) your earlier period of service with your current service for a single pension based on your final pensionable earnings when you next leave the scheme. If you leave your pension preserved, we will continue to increase it in line with increases in the Retail Prices Index (RPI).

If you are joining on or after 1 October 2002 and want to aggregate your service, you must choose to do so within 12 months of being eligible to join the premium scheme. Talk to your pension administrator to find out more. Please remember that if your earlier service was not in the premium scheme, it will be reduced slightly to take account of the premium scheme benefits being better than benefits in the previous pension scheme. "

Implies you must either freeze your existing 6.5 years or transfer it into Premium.

As for the choice between Premium & Partnership, if you're planning on spending any more than a couple of years in then the final salary premium is thw way to go.

MascaraMinx

Thank you guys. My head was spinning with all the jargon. Ideally I would like to stay in Classic, but I will have to check if I'm allowed. If not, I think I will leave my Classic forzen rather than transfer it across as I think it would hold more value?

Just one more Q on the 2nd state pension. Am I already "contracted out" in the Classic scheme, and therefore paying lower NI contributions? I am trying to gauge how much impact a change of scheme will have on my take home pay, which is the most important thing for me at the moment.

I like the idea of Partnership because I don't have to make contributions at all if I don't want to. This would be very handy for me for the next few years while I am focusing on trying to make mortgage overpayments. I could always increase contributions later in my service or switch over to Premium at a later date. Does that sound like a plan?

Andy_L

The PCSPS is a contracted out scheme so you are paying lower NI, as a result you won't receive S2P, only the basic state pension.

If you leave your classic pension frozen, the 6/80ths pension you have earnt will only increase by RPI each year, rather than increasing in line with salary.

You can swop (once only) between partnership & premium.

If you don't join premium this year you will have a retirement age of 65 instead of 60.

Premium has a contribution rate of 3.5% compared to the 1.5% you are paying in classic, with (nominal) employers contributions of 17-26% whilst with partnership the employers contributions are 3-12.5% plus matching your 0-3%.

We don't do advice here but you can probably see which way I'm leaning.

Andy

GunJack

MascaraMinx - if you are moving from one dept to the other with no break in service, you should be able to transfer, and so continue with the Classic (best) scheme. Check this out with your current and new depts, even if you applied via external recruitment they should be able to transfer you.

beedeedee

Hope I'm posting in the right thread here - as my situation is slightly different. Years and years ago I was in the Civil Service for just under 5 years. When I left, I was offered a "Short Service Gratuity" in return for giving up all my rights to a pension. At the time, I was young and didn't appreciate the significance of a pension and had no advice, so I took the cash, (not a lot obviously!).
A few years ago I heard something about this Gratuity having been pushed upon Civil Servants and that they were now investigating the legalities of the situation - has anyone heard anything about this ?