civil service pension query

Galoglas

I have 31 years accrued in my civil service pension. I have been offered a job in local government and I am trying to find out if I am best to leave my civil service pension as it is or transfer it to the local government scheme. I'll be 55 in April was planning to retire around 60.

hyubh

Galoglas wrote: »

I have 31 years accrued in my civil service pension. I have been offered a job in local government and I am trying to find out if I am best to leave my civil service pension as it is or transfer it to the local government scheme. I'll be 55 in April was planning to retire around 60.

If you transfer, you maintain a final salary link for service accruing final salary benefits. However, if your civil service NPA is 60, you'd lose that, being compensated with a higher service credit instead (a Club transfer between public sector schemes is designed to give like-for-like service were the benefit structures identical, and adjust the service credit in the new scheme accordingly if not).

Suffolk_lass

I thought that new entrants to local Government scheme were based on averaging salary as opposed to final salary - you will have a few months after you start to make a decision. Personally I would leave the CS Pension where it is and not transfer it.

If you froze your CS Pension don't forget the amount of accrued benefit will be index linked by the rate of inflation on 1st September every year to determine the amount of the annual indexation from the following April so it will grow (ironically faster than your salary would assuming no promotions).

My friend stopped work at 45 and drew his CS pension from his 60th birthday and reckons the indexation meant it kept pace with a full pension on his leaving salary. Quite impressive!

marlot

Suffolk_lass wrote: »

My friend stopped work at 45 and drew his CS pension from his 60th birthday and reckons the indexation meant it kept pace with a full pension on his leaving salary. Quite impressive!

Since I joined the civil service four years ago, I've had one pay rise, of 0.5%.

The index linking of the career average salary has meant it's done rather better (for me) than a final salary scheme would have done. Especially as it is a 1/43 scheme.

GunJack

I'm with hyubh on this - if your accrued service in CS has retirement age of 60, keep it where it is..and just remember to claim it at 60

Galoglas

Thanks for the advice. The civil service pension folk are obviously reluctant to give advice and rightly so in case it comes back to bite them. It is just so difficult to get advice on matters like this.
It is further complicated by the fact that I can take my pension at 55 so it's not a case of either leave it with the CS or xfer to the LG scheme I am able to take my pension while working in LG.

GunJack

Galoglas wrote: »

Thanks for the advice. The civil service pension folk are obviously reluctant to give advice and rightly so in case it comes back to bite them. It is just so difficult to get advice on matters like this.
It is further complicated by the fact that I can take my pension at 55 so it's not a case of either leave it with the CS or xfer to the LG scheme I am able to take my pension while working in LG.

just bear in mind if you take it at 55, you'll have around 5% per year, so 25% reduction in what it would be at 60, plus the annual % rise will be worth less......if you're still going to be working between 55 and 60 you'd be better not to take the CS pension early

Galoglas

GunJack wrote: »

just bear in mind if you take it at 55, you'll have around 5% per year, so 25% reduction in what it would be at 60, plus the annual % rise will be worth less......if you're still going to be working between 55 and 60 you'd be better not to take the CS pension early

I knew it would be 5% less per year but if I was no longer paying into it and freezing it then surely it would not be 5% a year as I was not paying into it it would not be rising anyway. I would lose just the indexation increase.

GunJack

Galoglas wrote: »

I knew it would be 5% less per year but if I was no longer paying into it and freezing it then surely it would not be 5% a year as I was not paying into it it would not be rising anyway. I would lose just the indexation increase.

No, if you take it before normal retirement age (I'm assuming 60 under the Classic scheme), your pension is reduced by 5% per year taken early, to reflect the fact you'll be claiming it early and therefore for longer.

GunJack

example:-

your pension is worth £100pa at age 60. If you take it at 55, it is worth £75pa (5%pa for 5 yrs = 75% of the £100)

This reduction is permanent, you never "get it back".

The other point is, say the annual increase is 1%, 1% of £100 is £1, so the next year the pension is £101pa. Taking at 55, 1% of £75 is £0.75, so in the second year the pension is £75.75.

So, not only do you start at 55 on 3/4 of the pension, the absolute value won't be increasing as much (a %age of a %age, if you see what I mean)

I'm sure someone else could put it better....

Galoglas

GunJack wrote: »

example:-

your pension is worth £100pa at age 60. If you take it at 55, it is worth £75pa (5%pa for 5 yrs = 75% of the £100)

This reduction is permanent, you never "get it back".

The other point is, say the annual increase is 1%, 1% of £100 is £1, so the next year the pension is £101pa. Taking at 55, 1% of £75 is £0.75, so in the second year the pension is £75.75.

So, not only do you start at 55 on 3/4 of the pension, the absolute value won't be increasing as much (a %age of a %age, if you see what I mean)

I'm sure someone else could put it better....

No thats pretty clear. Certainly sounds like the best bet is leave it alone.Start a new one in the LG scheme and use both when I decide to purchase the motorhome and take retirement.