Civil Service Pension Opting Out

Lyncroft

Hello

At the moment I'm in classic with about 25 years service due to go over to alpha in Dec. I can take this in 8 years time when I'm 60 which is what I'd like to do. If I resigned this would be banked. What would happen if I was then reemployed in the CS at a lower salary? Looking through the various stuff it seems I'd get auto enrolled into alpha and the previous service automatically linked up but based on my lower salary. I wouldn't want this. I just want the classic banked on it's own at my previous higher salary. Could I get round this by opting out within a month.

Any advice gratefully received, otherwise it's MyCSP on Monday (shudder):)

hugheskevi

What would happen if I was then reemployed in the CS at a lower salary?

If you return within 5 years then the deferred period would be cancelled, and the classic period would be re-linked to final pay. The final salary definition looks at salary over previous 3 years, so a lower salary wouldn't immediately have any effect.

More than 5 years and the classic pension stays deferred.

Looking through the various stuff it seems I'd get auto enrolled into alpha and the previous service automatically linked up but based on my lower salary.

Correct.

I wouldn't want this. I just want the classic banked on it's own at my previous higher salary. Could I get round this by opting out within a month.

You could, but a better choice would be to choose to join Partnership rather than alpha, as then the classic pension would remain deferred. You could also probably stay in alpha for a while before switching to Partnership, depending on which year your highest salary is in.

BobQ

Lyncroft wrote: »

Hello

At the moment I'm in classic with about 25 years service due to go over to alpha in Dec. I can take this in 8 years time when I'm 60 which is what I'd like to do. If I resigned this would be banked. What would happen if I was then reemployed in the CS at a lower salary? Looking through the various stuff it seems I'd get auto enrolled into alpha and the previous service automatically linked up but based on my lower salary. I wouldn't want this. I just want the classic banked on it's own at my previous higher salary. Could I get round this by opting out within a month.

Any advice gratefully received, otherwise it's MyCSP on Monday (shudder):)

You should check with MyCSP but this may help

http://www.civilservicepensionscheme.org.uk/media/95000/opting-out-faq-v3-2.pdf

It does not say so here, but my understanding is that you have to be out of the pension for 28 days before opting back in.

Note that resigning and opting out are not the same. Resign breaks continuity of employment, Opting out does not. But opting out for a period means you lose some rights while opted out.

But check with MyCSP.

BobQ

hugheskevi wrote: »

If you return within 5 years then the deferred period would be cancelled, and the classic period would be re-linked to final pay. The final salary definition looks at salary over previous 3 years, so a lower salary wouldn't immediately have any effect.

Hugh - is this advice consistent with the link I posted?

If the OP resigns and rejoins and works for 8 years the lower salary would surely have a significant impact?

Lyncroft

Thanks to you both for the replies.

You could, but a better choice would be to choose to join Partnership rather than alpha, as then the classic pension would remain deferred. You could also probably stay in alpha for a while before switching to Partnership, depending on which year your highest salary is in.

Can you still do that? I thought it's either Classic or Alpha, no?

Bob - I think that link seems to say that if I rejoin within 5 years then previous service will be banked and then linked to the new Alpha scheme where I earn less which I don't want which is why I was wondering if I followed the automatic opt in and then opted out within a month then that would get around the problem.

The reason for this is I'm thinking of leaving my current stressful job to apply for a lower grade/part time job in a cheaper part of the country.

hugheskevi

Hugh - is this advice consistent with the link I posted?

Yes, assuming Lyncroft does not do anything before leaving service (eg opting out and back in again), and returns after Dec (his alpha transition date).

If the OP resigns and rejoins and works for 8 years the lower salary would surely have a significant impact?

Yes it would, once the higher salary dropped out of then 3 year look-back period.

Can you still do that? I thought it's either Classic or Alpha, no?

Civil servants eligible to participate in alpha or who joined after 1 October 2002 can choose to switch to Partnership. As Partnership is a completely separate scheme, that means opting-out of the main pension arrangements, which also severs the final pay link.

Lyncroft

Thanks Hugh

So to clarify:

I'd be put in Alpha with my lower salary. To keep the link to my classic higher salary pension I'd either need to opt out within the month (downside no pension provision) or I could move to Partnership and need to do that within 3 years of being in Alpha to maintain the link to my higher salary?

Thinking about it a bit more would there even be a need to resign? Could I just opt out now and apply for the new lower grade job and do the alpha/partnership from there?

Yes, assuming Lyncroft does not do anything before leaving service, and returns after Dec (his alpha transition date).

- don't really understand this bit, sorry.

Kynthia

Please check with MYCSP but with Nuvos you had 12 months from rejoining (with a greater than 28 day break) in order to request that your previous service not be aggregated with your current service. This would mean your previous pension would remain deferred using the pensionable salary determined at the time. Is Alpha not the same?

hugheskevi

I'd be put in Alpha with my lower salary. To keep the link to my classic higher salary pension I'd either need to opt out within the month (downside no pension provision) or I could move to Partnership and need to do that within 3 years of being in Alpha to maintain the link to my higher salary?

You wouldn't need to opt out within the month, as you would still benefit from 3 year look-back of final salary, it would be the same as switching to Partnership, as either way you cease to be a member of alpha (membership of alpha automatically makes you an active classic member so although you do not accrue further service the final pay links apply, and ceasing to be eligible for alpha automatically makes you a deferred classic member).

It also isn't as simple as 3 years from date of joining, so it would be unwise to rely on that. The classic rules are difficult to interpret, but if you want a go the relevant rule is number 1.7 on page as numbered, or page 19 of the pdf.

- don't really understand this bit, sorry.

The rules are different if you were to leave classic and then rejoin the scheme whilst still being eligible to rejoin classic (ie rejoined before December). Once you become eligible for alpha in December, the rules about rejoining are different.

What it boils down to is that in your situation you have 3 choices:

(1) Leave classic now, stay out for 28+ days, then rejoin. That makes your existing classic pension deferred and permanently breaks the salary link. Regardless of when you rejoin and what you choose at that time you don't risk linking to a lower salary

(2) Don't do anything now. Assuming you rejoin post December, stay in alpha. Ensure you shift to Partnership by the point the link to lower salary takes place (which will be sometime within 3 years of joining)

(3) Don't do anything now. Choose to move to Partnership on re-joining. That means no risk of linking to a lower salary. You could also just completely opt-out, but there is no reason to do that instead of joining Partnership.

So (all assuming rejoin post December), if you have a strong preference for alpha over Partnership in the event you were to rejoin, you could do some things now to enable you to stay in alpha on rejoining. Otherwise, make sure you shift to Partnership on rejoining, either immediately or within about 3 years.

Thinking about it a bit more would there even be a need to resign? Could I just opt out now and apply for the new lower grade job and do the alpha/partnership from there?

Yes, no reason at all for resignation.

If you wanted to keep it all simple (and assuming that your pensionable pay has not been higher in the past few years), then you are probably best to stay in the scheme now, and then switch to Partnership from April 2017 (the earliest date you are eligible to switch). That will ensure you keep the higher final salary and mean you are still getting the benefit of employer contributions. You could also stay in alpha longer if you liked (up to about 3 years) but you will need to understand when the salary link to the higher salary ends - I'd suggest you should be wanting written confirmation of this from MyCSP to avoid any doubt, and ensure you switch the Partnership before that.