Is NUVOS any good

laughingboy

Hi

Is the civil service NUVOS scheme any good? (specifically in comparison to the pension I am currently enrolled in...)

From what I understand NUVOS is a final salary scheme payable from 65 (reduced if earlier).

I am currently in a defined contribution scheme whereby my employer matches my contributions of 10% of my salary (i.e. I pay 20% of my salary into a group stakeholder pension)

Thanks

dzug1

Yes it's good, but it's not a final salary scheme. It's career average.

You'll be paying 3.5% - which I believe is mainly for the widow's pension element. The main contribution you make is that they've reduced your salary by mumble mumble percent (used to be around 8% I think)

You'd be hard put to get anything better. Remember what you get is guaranteed (or at least as guaranteed as anything can be with a rabidly anti-public sector government) whereas a defined contribution scheme has no guarantees.

http://www.civilservice.gov.uk/wp-content/uploads/2011/09/NPS_booklet_with_insert0112_tcm6-1866.pdf may help

Andy_L

Nuvos is a carear average (not final salary) scheme with a 2.8% accrual rate, retiremnt age of 65 and 3.5% contribution rate. It has been hammered by the switch from RPI to CPI indexation & lost a lot in value

It is likely to cease to exist following the current, proposed, changes to Public Secter pensions and replaced with something new so it is probably an irrelevance.

How old are you, the existing money purchase alternative pays 3-12.5% plus a matching 3% so could well be better than your current scheme.

laughingboy

Thanks for the replies, I'm 28 and considering a change of job hence the question. The 'new' job offers Nuvos or a 'partnership' account (which sounds like a DC scheme)

Andy_L

Yep, partnership is the DC alternative

laughingboy

Andy_L wrote: »

It is likely to cease to exist following the current, proposed, changes to Public Secter pensions and replaced with something new so it is probably an irrelevance.

I know you don't have a crystal ball but in what ways would/could it change. Surely Nuvos will still be around (probably under a different name etc) but with larger employee 'contributions'?

hugheskevi

in what ways would/could it change

Nuvos is 1/43 accrual rate, new scheme will be 1/60.

Nuvos is revalued to Normal Retirement Age by CPI, new scheme will be revalued by earnings.

Nuvos is Normal Retirement Age of 65, new scheme will be Normal Retirement Age equal to State Pension Age (68 for you at the moment, may well increase more before you get there.)

Higher employee contribution rate.

Those would be key differences.

Goldenyears

hugheskevi wrote: »

Nuvos is 1/43 accrual rate, new scheme will be 1/60.

Ever since the public sector Career Average accrual rate was announced as 1/65 then 1/60 I have been intrigued by the lack of comment about the implications for the existing NUVOS rate of 1/43.

hugheskevi

For all except the oldest members (less than about 10 years from NRA), a 1/60 accrual with earnings revaluation would result in a larger pension than a 1/43 accrual with CPI revaluation, other things being equal.

For younger members, the earnings revalued 1/60 would end up being much better than the 1/43 CPI scheme.

As I read the proposals, NUVOS will end to new accrual along with Premium, Classic-Plus and Classic (the other Civil Service pension schemes) and a new scheme put in place of all 4 previous schemes.

BobQ

OP should note that the comments above about the replacement for Nuvos in the civil service is based on an understanding of the proposals from the Hutton Report and Governmemt pronouncements on its offer to the unions which relate to a reference public sector scheme. The exact characteristics of the replacement in the civil service are therefore still to be defined precicely and may not be exactly the same as the reference system.

Andy_L

Goldenyears wrote: »

Ever since the public sector Career Average accrual rate was announced as 1/65 then 1/60 I have been intrigued by the lack of comment about the implications for the existing NUVOS rate of 1/43.

AIUI the "new scheme" (current proposals as per hugheskevi post) is know as the "reference scheme". Existing schemes are allowed to deviate from that providing it still costs the same. Since Nuvos has a higher accrual rate, but lower indexation (RPI/CPI vs earnings) it could well be about the same cost as the reference scheme and thus stay (possibly with some minor tweaks to even out the cost)