Civil Service pension query

Satrdayboy

My wife works for the Civil Service and has over 35 years service. She has just received her annual pension statement, and is a member of both Classic and Alpha. At 60 she would get £7000 pa plus lump sum of £21000 and from Alpha £2000 at 67. My question is if she retired early for example 57 but funded her retirement from her Sipp and Isas would thes figures stay the same? I understand that on her pension statement it does say that the figures do not include any projected pension benefits.

Linton

The pension amount will be solely based on how much your wife has accrued and the date at which she takes her pension. How she funds herself after leaving the Civil Service is irrelevant.

Dazed_and_confused

Almost certainly not.

The basic entitlement would remain the same but there would be an inflation increase applied. That obviously depends on the inflation measure used but over a few years she can expect a small increase even if individuals years are occasionally 0%.

She should also check her State Pension forecast on gov.uk (not the headline but the next figure down showing her actual entitlement to date) as it is unlikely she has had sufficient time to get anywhere near the maximum of £168.60.

Making voluntary contributions may be worth considering as they can give an excellent return, potentially an extra £4.81/week for life (from age 67/68) for an initial outlay of £700-800.

Satrdayboy

Thank You Linton and Dazed for your replies, but still a bit confused. Basically what we want to know is if she were to retire from the civil service at 57/58 would the figures in her pension forecast be reduced even though she would not be accessing her pension at 60 and 67 respectively. Thanks

Dazed_and_confused

Your original post didn't make any reference to the pension being reduced.

But anyway, she needs to look at the entitlement she has built up so far in each scheme. The statement will probably show this to either 31 March or 5 April 2019.

That would only be reduced if she took the pensions before the normal pension ages of 60 and 67 (or there was a mistake in the calculation give been sent).

But she may well consider her State Pension to be "reduced". It isn't but lots of posters on here seem to think you get the full £168.60 with 35 years contributions but that doesn't apply to someone like your wife who is under transitional rules.

It would be sensible to understand what her State Pension is actually going to be rather than making any assumptions.

Satrdayboy

Thank You. We checked her State Pension entitlement and according to the Government website she only needs 3 more qualifying years, could this be wrong?

Dazed_and_confused

No particular reason it would be wrong, it's more that a lot of posters are under the impression 35 years contributions = £168.60.

You understand it's not that simple and she needs three more years (one of which she may be accruing at the moment, or at least reducing any voluntary payment needed).

Take care with the final year. If two years takes her to say £168.20 then paying for the final year will only entitle her to an additonal £0.40/week, not £4.81.

Audaxer

Satrdayboy wrote: »

My wife works for the Civil Service and has over 35 years service. She has just received her annual pension statement, and is a member of both Classic and Alpha. At 60 she would get £7000 pa plus lump sum of £21000 and from Alpha £2000 at 67. My question is if she retired early for example 57 but funded her retirement from her Sipp and Isas would thes figures stay the same? I understand that on her pension statement it does say that the figures do not include any projected pension benefits.

Under the Classic Scheme, if the forecast shows at 60 she will get £7000 pa and a lump sum of £21k, this will be on the basis that she continues to work until 60. If she leaves at 57 but doesn't take the Classic pension until she is 60, she will get a bit less than these figures as she will have 3 years less service. If she left at 57 and took the pension at that time then that would be lower still as there would be an actuarial reduction.

mjm3346

Audaxer wrote: »

Under the Classic Scheme, if the forecast shows at 60 she will get £7000 pa and a lump sum of £21k, this will be on the basis that she continues to work until 60. If she leaves at 57 but doesn't take the Classic pension until she is 60, she will get a bit less than these figures as she will have 3 years less service. If she left at 57 and took the pension at that time then that would be lower still as there would be an actuarial reduction.

Surely as a member of Alpha she is presumably now accruing no length of service "benefit" towards the classic pension and the only effect on that would be the preserved pension will be increasing at CPI if she leaves rather than any pay increases (CPI may be better or worse than pay increases)

Bravepants

Indeed, I have nearly 20 years in Premium, and I wouldn't expect not to get that at 60 if I stop working for my organisation next week.

Audaxer

mjm3346 wrote: »

Surely as a member of Alpha she is presumably now accruing no length of service "benefit" towards the classic pension and the only effect on that would be the preserved pension will be increasing at CPI if she leaves rather than any pay increases (CPI may be better or worse than pay increases)

Fair point. I didn't realise further contributions would be going to Alpha. I guess then that the £7k Classic pension figure plus lump sum will be what she will get at 60. Presumably the Classic pension would still be subject to actuarial reduction if she did decide to take it before 60?