If I stopped paying my Civil Service Pension Contributions..

BobQ

I think I would be more naive to blindly keep paying into a pension scheme without questioning if there was any point. I've been in the CS for 7 (long) years.(the 2 years refers to what the drones tell you when you ask how much money is in the pension pot-I transferred some in),

If you have been in the CS for 7 years and transferred pension into it, how can you only have 2 years pension?

RichandJ

BobQ wrote: »

If you have been in the CS for 7 years and transferred pension into it, how can you only have 2 years pension?

Quite.

And referring to others as "drones" is only going to come back on you OP. You say you're in the CS, there are an awful lot of people who might consider you in the same light.

Dalemar

Deleted post

ROBBIEZ666

RichandJ wrote: »

Quite.

And referring to others as "drones" is only going to come back on you OP. You say you're in the CS, there are an awful lot of people who might consider you in the same light.

I call them that because they refuse to actually tell you how much has gone into my pension pot. They say 2 years. It means nothing to anyone who doesn't fully understand pensions. It irks me more as I transferred in quite a bit from my previous employer.

hugheskevi

I've seen a lot of posts on this forum saying the nuvos pension scheme is inferior and possibly only on a par with the CS Partnership pension scheme.

That might be stretching things - from what I have seen, I generally question NUVOS most strongly, although a couple of others question it a little too, particularly for younger individuals with higher risk tolerances.

I'm only saying that as I am well aware it isn't a consensus view and wouldn't want anyone interpreting it as such.

However, I'm wondering what the evidence for this is.

As far as I am aware, there is no formal, rigourous study that can be referenced. Therefore, the evidence such as it is comes from calculations such as this one.

More generally, NUVOS is a career average scheme, which means you build up benefits in any given year based on your salary in that year, and those benefits are increased each year until retirement in line with inflation. Hence, when inflation changed to refer to CPI rather than RPI, NUVOS was affected more than the final-salary schemes and was already much less generous than those final-salary schemes.

The common consensus is that a defined benefit pension scheme is always superior to a defined contribution pension scheme, so why does this not apply in the case of nuvos?

Defined Benefits have 2 advantages. Firstly, some or all risks lie with the employer rather than the individual. Secondly, they tend to have much higher contribution rates.

Taking the first advantage, risk, there will be a level of compensation at which you would prefer to take risk rather than have certainly - take an extreme and unrealistic example to demonstrate, would you prefer that I promise to pay you a pension of £10 a year with certainty at retirement (a DB scheme), or that I put £1,000 a year into your pension, but you take the investment risk (a DC scheme). What the price of bearing risk is will differ across individuals according to their risk tolerance - so if you were heavily risk averse, a DB scheme with low payouts may still be better than a DC scheme that would have a higher expected value, but with more uncertainty. But for everyone, there will be some point at which they would be willing to bear the risk in return for higher expected value.

Secondly, NUVOS is a more modern Defined Benefit scheme, much less generous than final-salary schemes, so the old rules of thumb don't apply (or at least, not so strongly).

As NUVOS has very low revaluation (ie, increases by CPI) it is less valuable the younger you are (as its value erodes from the time you receive it until the time you commence pay-outs). At the moment, it looks about on a par with Partnership (summarising from the example quoted above - it depends on a variety of things, and in particular age), but add increased contribution rates for NUVOS which don't apply for Partnership, and the balance may well change - although it depends on the risk appetite of each individual.

However, if someone could explain why nuvos 'is of questionable value' then I would seriously look at switching to the CS defined contribution scheme.

Best you can do is probably to put your own figures into the example I linked to earlier, and see how it comes out for you, taking into account the contribution increases, age, etc.

zagubov

I've read every line of every comment and still convinced stopping the payments is a rubbish idea.

Look, there are a million people out there who will make money out of you as you try to fix things with your pension after this has gone wrong. The number of people who can make money out of you keeping your payments going is zero (apart from you that is).


Ever wondered why nobody's advising you to keep paying? Your pension's a tax dodge that only benefits you.

Read everybody's comments again slowly. If you find you still want to stop pension payments then PM me for my bank account details and send me the money you would save.

I'll invest it wisely and give you it back when you need.
Sure I will:D

jem16

robbiez666 wrote: »

I call them that because they refuse to actually tell you how much has gone into my pension pot. They say 2 years. It means nothing to anyone who doesn't fully understand pensions. It irks me more as I transferred in quite a bit from my previous employer.

Perhaps you are not asking the correct questions.

With a final salary pension, you don't have a pension pot. You simply have years ( and possibly days ) of service. If you have been in the CS for 7 years and been a member of the pension scheme for all that time you will have 7 years of pensionable service. Your transfer in will have been turned into pensionable years too. That may well be the 2 years you are referring to. So a total of 9 years most likely. To work out your pension you would calculate 9/80ths or 9/60ths ( depends on which scheme you are in ) of your salary.

So perhaps you should be asking how many years pensionable service you have. Do you not get a yearly benefits statement?

BobQ

jem16 wrote: »

Perhaps you are not asking the correct questions.

With a final salary pension, you don't have a pension pot. You simply have years ( and possibly days ) of service. If you have been in the CS for 7 years and been a member of the pension scheme for all that time you will have 7 years of pensionable service. Your transfer in will have been turned into pensionable years too. That may well be the 2 years you are referring to. So a total of 9 years most likely. To work out your pension you would calculate 9/80ths or 9/60ths ( depends on which scheme you are in ) of your salary.

So perhaps you should be asking how many years pensionable service you have. Do you not get a yearly benefits statement?

A very fair comment Jem16. I would add that the PCSPS is committed to providing annual statements, I think its also the law, so if OP has not received one he has a right to an explanation.

If he joined the CS 7 years ago it will be Premium so worth 7/60 of his final salary when paid, plus as you say whatever years his Aviva scheme represents.

I suspect that over the next few years there will be many like the OP who leave the pension scheme because of the contributions tax, based on the sort of ignorance that he has shown on this issue on this thread. He needs to get real!

jem16

BobQ wrote: »

A very fair comment Jem16. I would add that the PCSPS is committed to providing annual statements, I think its also the law, so if OP has not received one he has a right to an explanation.

According to the website, annual benefit statements are sent out.

http://www.civilservice.gov.uk/pensions/annual-benefit-statements

I suspect that over the next few years there will be many like the OP who leave the pension scheme because of the contributions tax, based on the sort of ignorance that he has shown on this issue on this thread. He needs to get real!

Unfortunately it's a common occurrence. Many of my teaching colleagues had no idea how to calculate their final salary pensions until we got a talk recently by an IFA. Most are now not so frightened of the proposed changes.

jem16

zagubov wrote: »

Of course the insurance salesman's job was to sell the private company's goods not the teacher's pension deal which nobody's job to push, you just have to search it out yourself. :mad:

If you see a Prudential AVC rep that's exactly what they will sign you up to. I would never have expected otherwise from a tied rep.

In this case it was an EIS ( Scottish teachers' union) Financial Services IFA who was only going through all of the options to help us be more aware of our own final salary pension. In fact it was one of their IFAs who told me 23 years ago that buying back years through the main scheme was much better than the Pru AVCs.