Should i opt out of the Civil Service pension scheme?

sammyjammy

silver918 wrote: »

Yes this is what i was concerned about. I have paid more than £1000 for one year yet my pension is worth way less than that. So let's say according to your calculation my pension is worth £500 and i am expected to live for 20 years after retirement does that mean i will get £10k a year?

Maybe not a Fast streamer then?

woolly_wombat

hugheskevi wrote: »

Note that it is likely your alpha pension will be improved between 2019-2023 (see this link for more detail).

That's a funny way to describe the extra hit that public sector employers are going to be faced with at a time of ongoing funding restraint hugheskevi.:think:

From the link:

early indications are that the amount employers pay towards the schemes will need to increase

.

Paul_Herring

early indications are that the amount employers pay towards the schemes will need to increase

I find it somewhat strange that elsewhere in that report this group of people are described as 'taxpayers', yet they are referred to as 'employers' in this sentence.

hugheskevi

That's a funny way to describe the extra hit that public sector employers are going to be faced with at a time of ongoing funding restraint hugheskevi.:think:

I think you are confusing a couple of different things.

Due to the change in the discount rate, employers will pay higher contribution rates. The Treasury will be "supporting departments with any unforeseen costs for 2019/20", presumably by increasing Departmental budgets. From 2020/21 onwards budgets are not yet set, and the higher required contributions will be taken into account when agreeing those budgets.

Separately, due to the likely breach of the cost cap floor (which is not affected by the change to the discount rate), the pension scheme itself is likely to be improved. For example, this could be achieved by increasing the accrual rate from 2.32% to a higher figure. Alternatively, member contribution rates could fall. The quote below is the relevant part of the Ministerial Statement:

Our initial results show that the protections in the new cost cap mechanism mean public sector workers will get improved pension benefits for employment over the period April 2019 to March 2023.

It was the likely improvement to alpha that I was referring to in my post above.

I find it somewhat strange that elsewhere in that report this group of people are described as 'taxpayers', yet they are referred to as 'employers' in this sentence.

There are 3 sources of funding - (a) individual member contributons (b) employer contributions (c) exchequer contributions to fund any shortfall between the amount needed to pay pensions in payment each year, less employee plus employer contributions.

'taxpayer' can arguably be used to describe all of (a), (b) and (c) as the money originates from the Exchequer and ends up funding the pension scheme, just getting there by different channels, but (c) is the clearest definition as the money flows directly from the Exchequer to fund the pension scheme.

darkidoe

Pollycat wrote: »

Your future, your choice whether to educate yourself.
I made sure I knew all about the pension scheme I joined.

The OP simply needs to read up about his particular scheme and keep abreast of any changes.
Personally, I don't think anyone needs to see a financial advisor if making a decision like whether it's a good idea to remain in the Civil Service scheme.

This is not about me or you specifically.

Of course it is easy to say it is a good idea to make the decision to stay in the civil service pension scheme. But do most people understand why? And to understand why, you would need to know what are the alternatives out there which are not as lucrative as the civil service scheme.

Most people on this forum are a self-selected group of individuals who are more financially savvy and can probably dissect terms and conditions down to the details.

What I am saying is, just speaking to fellow colleagues or the general friends, I don't have the confidence the average general public would know well enough to make that decision. Hence why pensions are set out to be opt out rather than opt in I reckon. And it's a good start that people are asking 'Why?'

MancJonny

The above is a fabulously informative thread & since stumbling upon it a month or two back I have recommended it to colleagues at my Civil Service place of work. It really does repay careful reading.

I am 60 yrs old this year, but am likely to work for another year or two just to narrow the gap between jumping ship and claiming the State Pension in 2025 at age 66.

Luckily for me, I am in the Classic (Defined Benefit) scheme. I have calculated that, over my 26+ yrs service, I should recoup ALL of my pension contributions - every single penny - within 1.7 yrs of retirement (it may even be less than this). Moreover, the Classic Pension will provide me with 6x - 6x! (7.5x if you include tax relief) - income per year what I am CURRENTLY paying into it. And that will continue until I draw my terminal breath.

And while the Alpha scheme is, for reasons outlined throughout this thread, less generous than the Classic scheme - why else would HMG have changed it? - it is still far better than anything available in the private pension market.

The OP must surely realise this by now!