Public Sector Pension Question

jonewer

I'm on the Premium scheme for the public sector and noticed that while my accrual rate is 1/60th, the accrual rate for Nuvos is 1/43rd.

I dont get it.

Is Premium pants or am I missing something?

hyubh

jonewer wrote: »

I'm on the Premium scheme for the public sector

The public sector has lots of pension schemes - you mean the civil service specifically.

and noticed that while my accrual rate is 1/60th, the accrual rate for Nuvos is 1/43rd.

I dont get it.

Is Premium pants or am I missing something?

Nuvos is career average, Premium final salary. In general terms, if you are employed by the civil service for a long period of time and enjoy decent career progression, a final salary scheme will be advantageous. That said, depending on your age, you likely to be moved to a Nuvos-style scheme in 2015 anyway (http://www.civilservice.gov.uk/pensions/reform).

hugheskevi

The two main differences are:

• Premium is linked to final salary, whilst Nuvos increases by CPI.
  
• Premium pension starts to pay from age 60 whereas Nuvos is 65.

There are many other differences, eg, death benefits, calculation of salary used (Premium looks back over 13 years to best inflation adjusted salary).

For most, Premium will be the better scheme, although for some older members in particular (who don't have many years of revaluation left) it may be that Nuvos could be better.

BobQ

jonewer wrote: »

I'm on the Premium scheme for the public sector and noticed that while my accrual rate is 1/60th, the accrual rate for Nuvos is 1/43rd.

I dont get it.

Is Premium pants or am I missing something?

You are missing something. You cannot compare the 1/43 and the 1/60. The pensions are different as others note above.

Premium pays 1/60 of your final salary* for every year of your membership. So if your final salary is £30000 it does not matter what you earn in the other years. They all count as 1/60 of your final salary. So 30 years means a pension of half your final salary.

Nuvos is a career average. You get 1/43 of what you earn this year plus 1/43 of what you earn next year and so on. The pension you earn this year will be updated for inflation and added to pension earned next year and so on. But if your final salary is £40000 and your current salary is £20000, you earn less pension in the current year.

* strictly Premium is not a "final salary scheme". Your pensionable pay (on which your pension is based) may be your final salary but if its better could be the salary you earned several years before uprated for inflation as the previous poster notes. In the current climate this could be very beneficial.

bigfreddiel

jonewer wrote: »

I'm on the Premium scheme for the public sector and noticed that while my accrual rate is 1/60th, the accrual rate for Nuvos is 1/43rd.

I dont get it.

Is Premium pants or am I missing something?

dont worry about it - it all goes to career average in 2015, unless you are within 10-12 years of retiring, in which case you stay in premium

cheers

fj

BobQ

bigfreddiel wrote: »

dont worry about it - it all goes to career average in 2015, unless you are within 10-12 years of retiring, in which case you stay in premium

cheers

fj

It does not all go into career average!

If the OP is not within the transitional period he will have a pension in two parts.

His Premium contributions will still be retained in that Scheme and pay a pension based on his pensionable pay (at retirement) for the years before 2015, and be payable at 60. The second part (career average under the Pension 2015 scheme) will accrue from 2015 on a career average basis (like Nuvos).

The rub is that you cannot draw the Premium part at 60 and carry on working full time. Well you can do but you would be stupid to do so as the pension would be abated (ie not paid). So you either need to go part time and use the Premium pension to top up your pay to the full time salary, or delay receiving it.

But if you retire at 60 you then find the Pension 2015 pension will be preserved till 65 or actuarially reduced by about 25% for paying it earlier.

bigfreddiel

BobQ wrote: »

It does not all go into career average!

badly worded i agree - your pension up to 2015 is obviously preserved and will not be affected

after 2015 (april) you move to the ca scheme - unless you have between 10-12 years to go till retirement age (60 for premium) and sp for the new ca scheme

quite simple really

fj

bigfreddiel

hugheskevi wrote: »

There are many other differences, eg, death benefits, calculation of salary used (Premium looks back over 13 years to best inflation adjusted salary).

as does classic plus