Civil Service Pension

lotto

Can you draw down against a lump sum of a civil service pension of 40years?

marlot

Surely the lump sum is tax free, so you take it and can invest it elsewhere - so can spand it whenever you like?


Or are you wanting to access the lump sum ahead of retiring?

lotto

Yes, I would like to take the money out ahead of retirement.

xylophone

You are currently still working for the Civil Service?

You have chosen not to bring your DB pension into payment at Scheme Normal Retirement Age (presumably age 60)?

lotto

Just want to pay what’s left of the mortgage

lotto

No, sorry entries crossed

lotto

Still working...age 58

Brynsam

No. No option to drawdown (nor can you transfer your CS pension to a DC arrangement).

marlot

Unless you want to retire early (or partially retire), the best option is probably to extend the mortgage until retirement date.

jamesperrett

At age 58 you'll lose nearly 5% on your pension for each year you retire before 60. However, you'll lose less on the lump sum as the actuarial reduction rates are different for the pension and lump sum. The pension will also increase with inflation which is likely to be higher than civil service wage increases over the next couple of years.

I'd still suggest not taking the pension early unless you are on a high mortgage rate and can't move to a lower rate for some reason.

Suffolk_lass

You could explore partial retirement ahead of your normal pension age. This would permit you to take an actuarially reduced lump sum (typical examples are 5% for each year you take it early) and some of your (similarly reduced) pension income, and reduce your working time by the proportion of your pension that you take.

e.g. take 40% lump sum and 40% of your accrued pension income (which is exempt from NI contributions), reduced by 10%. You then reduce to 60% of your working week. Your pension would reduce by 40% of your earned benefits (so 28 years left out of 40 in the example used) and you would accrue additional pension at 60% of your normal accrual rate.

There are lots of things for you to consider, including how much you would save in mortgage payments, if that is your key driver.

When doing the calculations (there is a calculator on the CS Pensions web pages - different for each scheme) remember you cannot be better off in income terms than you are now - so if you work too much - you do so for nothing (known as Abatement). Here is a link to a calculator

Abatement might still work for you if your employer will accept this but not a shorter working week. Your Management would need to agree that your job can be adapted (and they can absorb this) - at our place this generally excludes people working shifts.

It sounds counter intuitive to do this but lots of under 60s have done this (especially people with financial overheads who started before they were 20).