Civil Service Pension - leaving early

Kynthia

Jennie5 wrote: »

I used the compensation calculator and it asks whether you have worked PT in the last 3 yrs which I have, so it shows the compensation based on FT & PT. Also I understand the nearer you are to pension age, the less compensation you get, also another spanner in the works is the Compensation scheme being offered where I work is based on 3 weeks pay per year of continuous service up to a maximin of 18mths.

Ah, I probably don't have full knowledge of how the cap is applied but it sounds like recent part time service has a greater impact then.

jamesperrett

jerrysimon wrote: »

One thing that I considered in my calculations was how long it would have taken to recover the lost pension (taken earlier) if I stayed on.

I don't know how constrained your salary increases would have been if you stayed on, but for me my pension looks like increasing by 1-1.5% more per year than my salary would have thanks to the government's pay restraint policy. Over 4 years that would compensate for a years worth of actuarial reduction.

Jennie5

jamesperrett wrote: »

I don't know how constrained your salary increases would have been if you stayed on, but for me my pension looks like increasing by 1-1.5% more per year than my salary would have thanks to the government's pay restraint policy. Over 4 years that would compensate for a years worth of actuarial reduction.

Looking at the different options and as I am not in line for any salary increase for at least another 2 yrs, I think taking my pension 9 mths early and taking the actuarial reduction hit, is the best option. At least next year I will get the annual CPI increase and after two years I would have covered the actuarial reduction.

Is my way of if thinking this through correct and does does it sound sensible?

poorchester

Is it not better to use a small amount of your compensation payment to buy out the pension reduction?

Jennie5

poorchester wrote: »

Is it not better to use a small amount of your compensation payment to buy out the pension reduction?

When I used the Actuarial Reduction Buy-out calculator it gave me the figure £11,590.70 for the pension element, which seems very high when I would only be leaving under a year early.

Tom99

Jennie5 wrote: »

When I used the Actuarial Reduction Buy-out calculator it gave me the figure £11,590.70 for the pension element, which seems very high when I would only be leaving under a year early.

Depends how much extra pension you get for that. If say age 60 you tried to buy an index linked pension, it could well cost x35 ie for £11,590.70 you might get £331pa.

Jennie5

Tom99 wrote: »

Depends how much extra pension you get for that. If say age 60 you tried to buy an index linked pension, it could well cost x35 ie for £11,590.70 you might get £331pa.

It roughly works out at £540pa, which again for the amount I would need to pay up front seems a lot.

Tom99

Jennie5 wrote: »

It roughly works out at £540pa, which again for the amount I would need to pay up front seems a lot.

x21 and the £540pa will be taxable so, yes, quite a long payback period. Is your state pension fully topped up, that is much better value at about x3.5 if there are any missing years you can pay for .

Jennie5

Tom99 wrote: »

Is your state pension fully topped up, that is much better value at about x3.5 if there are any missing years you can pay for .

Just checked my NI contributions - it says I have 43 yrs of full contributions and 7 yrs to contribute before 5 April 2025 so I think I am well covered for the state pension, unless the government move the goal posts again!

Tom99

Jennie5 wrote: »

Just checked my NI contributions - it says I have 43 yrs of full contributions and 7 yrs to contribute before 5 April 2025 so I think I am well covered for the state pension, unless the government move the goal posts again!

Are you entitled to £164.35pw on your contributions to date though? If you have been in the Civil Service or similar pension scheme the chances are you will not have earned £164.35pw but can top it up in the remaining 7 years even if you are not working.