civil service pension query

dav64

I think everything you suggested so far, Dazed, has been correct. That thread was very helpful and sort of confirms that there will be a catch up in payments once I reach 55. I suppose I was just hoping to get some validation from someone who'd been there. I called MyCPS 2 days ago but I have a feeling my queries were not within the scope of the operator I spoke to (the waters were even muddier after the call).

Silvertabby

I'm not a CS expert, and will be happy to stand corrected - but the way I'm reading it is that if you take your benefits before 55 then the actuarial reduction would apply straight away but the pensions increase wouldn't hit until age 55.

Then, at 55, the increase factor would be applied to the reduced pension in payment, and not the whole deferred pension.

If I'm right, then waiting until you are 55 before you start to draw your pension would make sense.

moo121

Hi dav64 thankyou so much for querying this because it made me go back and look through my paperwork once more.

I left civil service in 2012 with preserved classic pension which I then took in 2016 at 51. I will hit 55 next year and will see how it all catches up.

For some reason I assumed they applied cost of living increases to deferred pensions, then calculated and paid them, and it was just the further increases they didn't apply until 55. Using that rationale would mean I'm probably expecting 5-6% uplift next year for 2016-2020 increases.

I've just gone back to read the papers properly......

Yes, they based my calculation on my 2012 preserved pension amount (except actuarial reduction was quite generous so the total tied in with my guestimations so I didn't twig) and they included the line about not getting pensions increases applied to this figure till 55.

So, by my quick calculations, this could mean probably an extra 5% to come next year, due to the COLA increases on the preserved pension 2012-2016 additionally being applied, plus a tidy little lump sum addition?

Anyone else know how this works?

Please nobody burst my bubble. I'm already planning my spends!

Dazed_and_confused

If I'm right, then waiting until you are 55 before you start to draw your pension would make sense

Have to agree. Seems far simpler. And will be a slightly smaller actuarial reduction

dav64

Thank you, moo & tabby. This is what I think I have learned from 48 hours solid research...
Upon my 55th birthday this December the deferred pension figure from 2007 will be multiplied by 1.3469 and then that figure will be multiplied by (approx 0.75) and the resulting figure will be my annual pension. I will also receive a lump sum of 3 times the end figure.
If I choose to start my pension 5 months earlier (August 2019) then the deferred amount from 2007 is reduced by 30% and that becomes my annual pension until December when I turn 55 (I'll have 5 monthly payments). In December my pension figure from 2007 is multiplied by 1.3469 and then this figure is multiplied by 0.75 giving me a new annual figure. This should then rise once a year with the rate of inflation.
I'm ringing MyCPS tomorrow to confirm all this but following my chat with them last week I fully expect to be confused again afterwards.

dav64

I'm so utterly paranoid about the whole Brexit thing and I'd convinced myself that the country would be bankrupt before the end of the year and that EVERYONES pensions would be lost. This was actually a factor in my decision to start the pendion in August. Feel free to laugh!

Dazed_and_confused

If I choose to start my pension 5 months earlier (August 2019) then the deferred amount from 2007 is reduced by 30%

In your earlier post it seemed the reduction for taking it on 1 August was only 21.73%

dav64

I think I got 30% from the 5% per year thing. August 2019 would be in the 6th year before turning 60. The factor they used was 0.78.

moo121

dav64 wrote: »

Upon my 55th birthday this December the deferred pension figure from 2007 will be multiplied by 1.3469 and then that figure will be multiplied by (approx 0.75) and the resulting figure will be my annual pension. I will also receive a lump sum of 3 times the end figure.
If I choose to start my pension 5 months earlier (August 2019) then the deferred amount from 2007 is reduced by 30% and that becomes my annual pension until December when I turn 55 (I'll have 5 monthly payments). In December my pension figure from 2007 is multiplied by 1.3469 and then this figure is multiplied by 0.75 giving me a new annual figure. This should then rise once a year with the rate of inflation.

Nearly, but not quite. If my understanding is correct: I think the actuarial reduction figure will stay the same for both. I'm using a 78% figure as in practice the 5% per year seems to be worst case and I think you've already been quoted this sort of figure?. So my assumptions are like this:

August: 2019:: Deferred 2007 pension figure x actuarial reduction factor, say 0.78, lump sum approx 3 times this. Pension paid for 5 months?
December 2019: Pension revalued at deferred 2007 figure x 1.3469 pensions increase x actuarial reduction factor of 0.78, lump sum revalued at approx 3 times this figure, difference with Aug (based on 2007 figure) amount of lump sum is paid as a further tax free amount..
April 2020: Further part year increase applied to pension in April? Move onto annual increases from here.


If you get any sort of sensible reply from MyCSP I'd be very interested to see if my assumptions are correct.