Classic CS pension inverse commutation rate

Noodling

Hi - does anyone know what factor is used by the civil service classic scheme for calculating inverse commutation?

I believe I have a preserved pension of £4,350 pa with a lump sum of £13,050. If I were to ask for that lump sum to be converted to pension, how much would my annual pension be please?

I am 56 next birthday and plan on taking actuarial bought out early retirement three-months after that birthday.

Thanks in advance.

hugheskevi

The factors are set out at this link.

For a person aged 56.25 inversely commuting £13,050 the increase in pension would be between £595 and £646, depending on survivor pension and gender. That is a factor between 20 and 22. I'm not sure if there are any limits to the amount you can commute.

Andy_L

ISTR that the rate isn't fixed but varies based on the current view of longevity, (nominal) investment returns etc & you need to get in touch for a quote

Edit: or perhaps not then

Noodling

Thank you very much for that information.

I don't quite understand this comment though -?

Andy_L wrote: »

Edit: or perhaps not then

bluenose1

Noodling - I have a classic civil service pension deferred from when I left in 1995. Apart from the Pension Statement I request now and again I have never had any Pension information.
I was assuming I could get this Pension from age 60.
I am potentially thinking of retiring at 57 and thought I would live off savings until then.
Just curious as to what are the advantages of actuarial bought out early retirement Forgive my ignorance.

OldBeanz

bluenose1 wrote: »

Noodling - I have a classic civil service pension deferred from when I left in 1995. Apart from the Pension Statement I request now and again I have never had any Pension information.
I was assuming I could get this Pension from age 60.
I am potentially thinking of retiring at 57 and thought I would live off savings until then.
Just curious as to what are the advantages of actuarial bought out early retirement Forgive my ignorance.

General consensus is not to do it if you have other savings/pensions. In your case you may benefit from feeding your savings through a personal pension so that you gain tax relief on the way in and could draw your tax allowance + 25% tax free between 57 and 60.

bluenose1

Many thanks OldBeanz. My main source of ‘savings’ will be my defined contribution pot from my current employer. I am hoping to have enough to claim up to the Personal tax allowance per year until 60.
Just trying to work out in what circumstances it would be advantageous to do actuarial bought out early retirement. I have had a look at the calculator and if I have done it correctly the buy amount was about £18k. My annual pension is currently worth £5,880. I take it that means if I paid the £18k I could get the £5,880 from age 57 instead of 60? Though as OldBeanz has said that may impact on being able to maximise the personal tax allowance.
I can’t believe how confusing pensions are!!!

kidmugsy

bluenose1 wrote: »

I can’t believe how confusing pensions are!!!

I've been visiting this site for half-a-dozen years, and that's my main conclusion.

Noodling

bluenose1 wrote: »

Noodling - I have a classic civil service pension deferred from when I left in 1995. Apart from the Pension Statement I request now and again I have never had any Pension information.
I was assuming I could get this Pension from age 60.
I am potentially thinking of retiring at 57 and thought I would live off savings until then.
Just curious as to what are the advantages of actuarial bought out early retirement Forgive my ignorance.

Hi bluenose - well, it seems to me (unless I am missing something) that you get back more than the cost of the actuarial buyout cost over those early years when you exercise this option (albeit marginal). Plus it is index linked - without a cap, I think - so I can't see how it would put us at a disadvantage.
I have planned my SIPP inputs and withdrawals around this scenario to max out withdrawals under personal tax allowance ( plus the 25% tax free bit).
For instance, if I tell the calculator my pension is £5k and I want to take it a full 4 years earlier, the BO cost is £18750. Pension received over that time is £20k without any increases for index linking.
Please, anyone, shoot holes in this for me, as I am not far off pulling the trigger, so would be gladly enlightened.

OldBeanz

How would the tax work out? With some Govt pensions you get no tax relief other than through your pay e.g. the wife buys extra pension to take her pay down to £11500pa so she pays no tax through salary then has to SIPP any other money to get tax relief on that.
You may gain more passing the money through a SIPP and would have the flexibility to take more or less if required.

Andy_L

Noodling wrote: »

Thank you very much for that information.

I don't quite understand this comment though -?

Is cross posted with hugheskevi who'd demonstrated, with his link, that I was wrong and edited my post to reflect that