Civil service Nuvos pension

spiggot

I've recently joined the civil service and am a bit confused about whether to take the Stakeholder pension or the Nuvos fixed contribution pension scheme. I'm 30 so the employers contributions seem to be higher for Nuvos with me only paying 3.5%, however I don't fully understand how it works. I'm also on a 12 months contract, which may be extended. If I'm in the scheme for less than 2 years I think I get the contributions back, but it's not clear to me how much I'd get back of what I paid. Also can the contributions be transferred into another pension, eg stakeholder?

Can anyone provide any information on Nuvos, and in particular about transferring out should I leave the civil service in 12 months? I'm starting to think it would be easier to take a stakeholder pension as I already have one of these and so have a slightly better understanding of how they work. Not sure if this is the best option though.

jonathon_hart

Sorry don't know the Civil services schemes, but once you have been in a pension for 3 months then they have to offer you a transfer value, although they can limit the time the transfer value is available for.

sleepless_saver

Civil Service Pensions website has detailed info on your options which are Nuvos or a Partnership Pension Account.

spiggot

jonathon_hart wrote: »

Sorry don't know the Civil services schemes, but once you have been in a pension for 3 months then they have to offer you a transfer value, although they can limit the time the transfer value is available for.

Yes I know I'd get something, but it's not clear how much I'd get if I did transfer out. If there's a big penalty I muight be better off with a Stakeholder if there's a chance I'll be leaving in 12 months. Are fixed contribution schemes generally better or worse than Stakeholder pensions? Seems to me like the employers contirubtions are much higher with fixed contribution instead of Stakeholder.

I've read through the website mentioned above already, still doesn't give me all the answers.

Andy_L

Under Nuvos (the new Civil Service Scheme) every year you work there you will receive, when you reach 65, a pension equal to 2.3% of the salary you earned that year
eg if you earn £20kpa you would get a pension of £460 for that year. This will then increase by RPI until you are 65.
The next year you will accumulate another 2.3% however your salary will (should/may?) have increased & so that 2.3% will be more.

If you transfer out (of Nuvos) with less than 2 years & take the cash rather than transfering to another pension you only receive a refund of YOUR contributions. If you transfer to another scheme you receive a transfer view based on a financial estimate of the value of the pension promise.

Alternatively you can leave it in Nuvos & take the annual RPI increase

As far as Nuvos vs Partnership (stakeholder) at age 30 you'd get a 6.5% contribution plus (up to) a 3% matching contribution. (increasing to 8% next birthday).

Generally Defined benefit schemes (like Nuvos) are worth more than Defined contribution schemes (like the Partnership Stakeholder). The previous Civil service scheme had employers contributions estimated at ~20%, although that had a retirement age of 60 not 65.

jonathon_hart

Ok. I've had a quick look at the link above. The Nuvos scheme is a CARE scheme (Career Average Revalued Earnings). It has several similar characteristics to a Final salary scheme (but also several very important different ones). The partnership plan looks like a DC plan.

The Nuvos plan transfer value will similarly to a DB one depend on several factors such as age, amount of benefit and actuarial assumptions, so unfortunately it is impossible for me to tell you what you will get as a transfer value. There is however no explicit mention of any penalties for transferring. The employer contribution into the Nuvos scheme will be sufficient in order for the scheme to have enough money to purchase your benefits at retirement, so will change over time.

In regards as to which is better, one we can't advise on here, two I'm an administrator and not an IFA anyway.

Andy_L

jonathon_hart wrote: »

The employer contribution into the Nuvos scheme will be sufficient in order for the scheme to have enough money to purchase your benefits at retirement, so will change over time.

Sort of, the CS schemes are unfunded Ponzi-esque schemes where the employers/employees contributions are used to pay the pensions of retired members (with any shortfall/credit being dealt with by the treasury/taxpayer) They don't purchase annuitys/gilts like a funded scheme.

sunnyboyjim

I joined the civil service back in Jan 2007, and joined the nuvos pension plan scheme, although knowing I would only be there for about a year or possibly more. I left after about 14 months service, playing into the penison every month. Ihave been trying toi find numbers to contact to clain my contributions back, as it was less than 2 years service..the people or at my old work have been no help whatsoever! any ideas?

dzug1

You could try http://www.csp.capitahartshead.co.uk/ who administer the scheme

or maybe http://www.civilservice.gov.uk/pensions/index.aspx

sunnyboyjim

many thanks i'll check out the contact details on those websites! i should have never joined in the first place if i knew it would be this much hassle to get it back!

whitfreak

Unless you can see yourself staying for 2 years I wouldnt bother with nuvos. Mainly due to the fact that if you leave with less than 2 years pensionable service you either get your contributions back as cash (minus the tax relief) or have a short period to transfer a calculated value elsewhere. You cannot leave it there. Which is why I'm surprised that its offered to those on 12 month contracts.