Does anyone know how the 3 year buy outs work on civil service pensions?

FIRSTTIMER

Most government pensions have the same option where you can buy out an actuarial reduction of up to 3 years - meaning retirement at current ages of 65 instead of 68 with no reduction.

If I have banked a pension of say £25000 by the age of 55 under career average and then stop working. Does this mean I can take the full £25000 plus any growth (cpi etc) at age 65 without ANY actuarial reduction?

Call centre staff were struggling to understand what it was I was asking - ie is the 3 year buy out a contract until age 65 or a contract of a 3 year buy out only regardless of when stopped working.

hugheskevi

meaning retirement at current ages of 65 instead of 68 with no reduction.

To be precise, meaning that you can take a pension with no reduction 3 years prior to whatever your State Pension age may be at the time. This could be higher than age 68.

If I have banked a pension of say £25000 by the age of 55 under career average and then stop working. Does this mean I can take the full £25000 plus any growth (cpi etc) at age 65 without ANY actuarial reduction?

You could take it 3 years prior to whatever your State Pension age may be at the time.

ie is the 3 year buy out a contract until age 65 or a contract of a 3 year buy out only regardless of when stopped working.

It is a contract of a 3 year buy out only regardless of when stopped working.

Think of your pension as a series of building blocks, each block representing 1 year of accrual. Each year you contribute extra to purchase EPA gives that year of accrual an EPA age.

If you choose to purchase a -3 EPA, the pension associated with that block of accrual is payable unreduced from 3 years prior to whatever your State Pension age may be at the time.

If you purchase a -3 EPA for every year you work, your entire pension is payable unreduced from 3 years prior to whatever your State Pension age may be at the time.

If you were to commence your pension at age 60 having purchased a -3 EPA on your entire pension, the actuarial reduction would reflect the value of the EPA, for example, if your State Pension age had increased to age 69, the actuarial reduction would reflect taking the pension early at age 60 rather than the EPA age of 66.

tibbles209

If you buy out 3 years early retirement reduction, on taking your pension at age 65 (assuming your SPA is still 68 by this point) you would receive any pension which you had accrued after joining the EPA scheme unreduced, however EPA cannot be applied in retrospect, so the proportion of your pension which you had accrued prior to joining EPA would still be actuarily reduced.

FIRSTTIMER

Thanks for this insight, I have done 3 year EPA on my entire pension since commencing 5 years ago. I won't take it until 3 years prior SPA. Just wondered what was the case if I stop working at age 60. Don't claim until age 65. Would I get everything I had banked up to age 60 with no reduction or would there be a reduction because I didn't stay in pensionable employment until SPA minus 3 (65).

hugheskevi

I won't take it until 3 years prior SPA. Just wondered what was the case if I stop working at age 60. Don't claim until age 65. Would I get everything I had banked up to age 60 with no reduction or would there be a reduction because I didn't stay in pensionable employment until SPA minus 3 (65).

You would get everything you had accrued at age 60, plus CPI increases, paid unreduced at age 65.

FIRSTTIMER

Great to know thanks