Civil Service pension

Tony_Geo

My brother works in the Civil Service and was in Classic Scheme for 38 years but opted out of it in October, leaving his pension as preserved. He is still working for them and has now decided that he wants to opt in to the pension. When he asked about this he was told that they would need to work out which scheme he would go back into. Does anyone know the answer ?

As far as I can see the guidance suggests that he can only opt into the same scheme but it also says that this may have changed now Alpha exists.

westv

I thought Alpha was now the only one available but I may be wrong.

bigfreddiel

westv wrote: »

I thought Alpha was now the only one available but I may be wrong.

You are wrong, you can stay in classic as long as you are within ten years of the retirement age of the scheme, 60 in this case of classic.

There are some more complex rules that can extend this to about thirteen years from the retirement age.

But you must ask why opt out and then decide to opt back in?

The other thing about the Classic scheme is that they extended the years you could accumulate from 40 to 45. So you could retire on 45/80ths of your final salary. Nice.

Cheers fj

atush

Why did he opt out?

Tony_Geo

If you opt out and back in more than 28 days later your accrued pension is preserved and so increases with CPI and your opted in pension is separate. Its a reasonable assumption that his salary for the next three years will be <1% and that inflation will be higher. He is nearly 60, unmarried so seems a risk worth taking.

bigfreddiel

Tony_Geo wrote: »

If you opt out and back in more than 28 days later your accrued pension is preserved and so increases with CPI and your opted in pension is separate. Its a reasonable assumption that his salary for the next three years will be <1% and that inflation will be higher. He is nearly 60, unmarried so seems a risk worth taking.

Ah yes I forgot about that, something I considered a few years ago.

The only problem here is that if you were to be made redundant or asked to leave early, I forget the exact terminology, then the amounts you are entitled to depend on length of service in the pension scheme. This will be based on your deactivated scheme, not on the preserved scheme you opted out of. Also there is a danger in the 28 days out of the scheme you're not covered in anyway, especially in the event of death.

Otherwise this is a good way to go.

Cheers fj

Tony_Geo

By brother pondered these issues before opting out, but at 60 any redundancy deal in Classic would be limited to 6 months pay (being over the NRA) and while the death benefit was an issue being unmarried the only loser would be a charity.

The aim of the question was not to get views on his decision but to ask which scheme he will be opted into. His employer says they would have to ask MyCSP. They say its up to the employer. It just seems to me that they ought to know. I doubt it makes much difference to him apart from when the few opted in years get paid (ie immediately or at SRA)

Acquinas

I think he would have to ask MyCSP (who may struggle themselves). But my instinct is that he will be treated as a new starter and enrolled into Alpha.

Kynthia

You could see if your query can be referred to MyCSP's Scheme Compliance Unit if you feel the contact centre staff don't have tge knowledge or are incorrect. However if they are right that it is down to the employer to decide then that's what will need to happen, but I'd get the SCU to confirm that.

westv

westv wrote: »

I thought Alpha was now the only one available but I may be wrong.

bigfreddiel wrote: »

You are wrong, you can stay in classic as long as you are within ten years of the retirement age of the scheme, 60 in this case of classic.

But the OP is referring to a situation where someone is opting back in, not someone already in the scheme.

Teaandscones

I did something similar in the LGPS by opting out for one month and then opting back in again. I don't regret it as I now get inflation linked increases rather than pay rises of 1% max, and can now split when taking my benefits (thus avoiding actuarial reduction on the second tranche), though there is a potential loss in the event of redundancy.
I suggest that your brother checks 2 potential elephant traps, namely:
1. whether if he rejoins the civil service will automatically aggregate the previous fund and thus base final salary on his current salary. If so can he specify to keep the benefits separate.
2. Check that they don't aggregate the 2 pensions based on his new pension retirement age, rather than his previous one.

There should be a way round this (and the civil service scheme may be different to LG) but it is worth checking first.