If I stopped paying my Civil Service Pension Contributions..

ROBBIEZ666

how negative an effect would it have?

Apparently I have about 2 years worth of pension already saved (through the CS and a Norwich Union scheme I transferred in).

My contributions have gone up this year by £40pm and are set to go up again the next 2 years. I have no intention of retiring early.

I'm already looking at losing tens of thousands off of my scheme (which may be the Premium one) with the recent government changes. Its coming to the point where I am going to be paying so much contribution that I don't have money to actually enjoy myself whilst I'm young enough to do so, and looking more pointless saving for a day in my 70s (which is where the retirement age is going) where I'll probably not be in a condition to enjoy it (or maybe even dead!).

It would seem that any assets I did have would be taken off me should I have to go into a home. It would seem a better idea just to not pay it and, if things stay as they are now, I'd get a state pension, benefits and housed for free.

I'm no expert on pensions (as you've probably noticed), but it seems pointless to keep paying into a scheme?

taking_stock

so your total pension contribution is less than £100pcm - and that's gross, so you'd pick up £70pcm by cancelling it? for that saving, you would be giving up about £400pcm of employer contribution - doesn't make sense at all, you'd just be consigning yourself to poverty in old age and reliance on state benefits that may change.

at least with your current pension, you can still take it at 55 (albeit with an actuarial reduction), despite the normal retirement age rising to 65, 66, 67 or 68, depending on your age.

it would be madness to leave the civil service scheme.

dunstonh

My contributions have gone up this year by £40pm and are set to go up again the next 2 years. I have no intention of retiring early.

And if you dont pay towards a pension you will have no intention of retiring or if you do then living on the breadline for around 30 years.

I'm no expert on pensions (as you've probably noticed), but it seems pointless to keep paying into a scheme?

Yes it does show. You would have to be an complete and utter nutter to leave this scheme. You are paying a pittance into the pension and getting back a level of income that most of us can only dream of for the level of contribution paid.

Nothing else will come close to matching the benefits you are getting. It appears you have fallen for the rubbish that is being published by vested parties (i.e. Unions) and have a bit of a jaded view on benefits and income. If you want to live on benefits (which will be much reduced under the new state pension scheme) do you really fancy living on under £9000 a year in todays terms for 30 years?

ROBBIEZ666

I'm pretty sure, the way politicians are going, that I will be working to the state pension age whether I like it or not.(they can basically do what they want to do with our pensions, and if not, they will just re-write the law so they can)

I just find it hard to see how making economies when I'm young(ish-35) and going without is sensible just so I can get enough money to "live on" when I retire at the age of 70+.

It would seem that you get basic care and assistance if you have nothing so why bother spending your entire life frugally to get a similar amount to what you get if you saved nothing?

dunstonh

I'm pretty sure, the way politicians are going, that I will be working to the state pension age whether I like it or not

Are politicians responsible for you living longer?

When the state pension was introduced, the life expectancy post retirement was just 2 years. Now, for someone your age, its heading towards 30 years. That gap needs to be paid for. So, moving the age to 68 and probably 70 is logical.

I just find it hard to see how making economies when I'm young(ish-35) and going without is sensible just so I can get enough money to "live on" when I retire at the age of 70+.

Your pension contribution you see deducted on your payslip is the gross amount. You get tax relief and pay lower NI. So, if you opt out, you will not get the same amount of money you see on your payslip being paid to you.

Pension credit is slated to be abolished in a couple of years time. So, that wont exist when you retire. Benefits are under constant strain and most financial models predict that the UK will not be able to sustain benefits at the current level in the future. Even if they existed at the current level, you are looking at living a quarter of your life on £9k a year and virtually no savings allowed.

It would seem that you get basic care and assistance if you have nothing so why bother spending your entire life frugally to get a similar amount to what you get if you saved nothing?

I suggest you see what that basic care is like. If anyone wants a reason to provide for your retirement, then that is one way to persuade you.

It appears you have made up your mind and that you want to spend a quarter of your life in poverty. That is your choice. I just think you are totally mad and irresponsible. Hopefully you are not married or have children as it would be so unfair for them to suffer because of you.

BobQ

Apparently I have about 2 years worth of pension already saved (through the CS and a Norwich Union scheme I transferred in).

I'm already looking at losing tens of thousands off of my scheme (which may be the Premium one) with the recent government changes.

If you joined the CS two years ago you will be on Nuvos (not Premium). The Nuvos scheme is a career average salary scheme. Either way you are seeing your pension contribution increase from 3.5% to an amount that depends on salary. On a salary of £25K it will go up to 4.7% this year and to 6.7% in two years time.

I agree that its more than you expected when you joined and it will feel like a pay cut but please be realistic. Compared with what others pay for a comparable pension, contributions of 6.7% with an employers contribution of 3 times that is still a good deal and as dunstonh says you would be a complete nutter to stop it.

Of course you can take the selfish view that you invest nothing in your retirement and rely on the state (that's everyone younger than you now) to look after you. If you look at history you will see that it was less than 100 years ago that people worked till they dropped with very little state help, even if they were unfit to work. They often had to appeal to charities to get their basic needs. Those that lived a comfortable life were those who made provision for their old age. By the time you come to retire you may find that people's tolerance of those who gave up good pensions in their mid-thirties to spend their income on the assumption that someone else would look after them has waned.

I was surprised to find you are 35, I had imagined your first posting was that of a naive 21 year old.

CKhalvashi

It’s not a case of not paying into scheme, it’s a case of the people like my mother (who’s 55 with 21 years NHS contributions) that are being told they may lose the 3x salary, which would pay her IO mortgage. This is one of the reasons that she didn’t go private 20 years ago.

As the same with any Public Sector scheme, you’re better off under the scheme than outside of it 99% of the time. Best thing to do is sit down with an IFA.

CK

hugheskevi

If you do choose to leave the scheme, rather than doing nothing, you should join the non-contributory Partnership pension scheme the Civil Service offers. That would protect you from the pension contribution increases.

Even better, contribute 3% to get the full employer matched funding on offer. That should be a lower contribution rate than you have been paying, so the overall net pay shouldn't change much, as the 0.5% saving on the contribution rate will be lost on the higher National Insurance paid due to not being contracted-out. And you will accrue State Second Pension in return for those slightly higher contributions (which you currently don't get due to Nuvos being contracted-out).

There isn't much to choose between Nuvos and Partnership, so the loss (if any) would be minimal (although you should still do the calculations to compare the options for yourself) and there other considerations such as death-benefits which will differ between the schemes.

BobQ

It’s not a case of not paying into scheme, it’s a case of the people like my mother (who’s 55 with 21 years NHS contributions) that are being told they may lose the 3x salary, which would pay her IO mortgage. This is one of the reasons that she didn’t go private 20 years ago.

Being told by whom?

There is no change proposed to the pension accrued up to 2015 (ie your mother will still get a pension and lump sum based on accrued service in the current scheme but based on her final salary at a later date - when she retires.

Those that transfer to the new scheme will still earn additional pension at 1/57 of salary per year, indexed at CPI +1.5% and can commute part of that pension to a lump sum at the new retirement date.

As your mother appears to be within 10 years of NRA she will benefit from the transitional protection so at that age she will get the same pension and lump sum as she would have done.

dimbo61

Can I ask do you have an IPHONE or smart phone? maybe SKY tv as well and you cant afford to pay into one of the best pensions available today.
This also provides life assurance of 2X income in case you died while working.
Have a look at other spending if you need to cut back

dunstonh

it’s a case of the people like my mother (who’s 55 with 21 years NHS contributions) that are being told they may lose the 3x salary, which would pay her IO mortgage.

Who is telling her that? There are no changes like that proposed on built up entitlement that will affect her. So, either she hasnt understood the changes or she is being fed a line by someone (the NHS is prone to troublemaking myths more than any other profession - either the unions or some misguided work colleague causing trouble)