updates on FBU, Civil service pensions

Mr_Countdown

Tromking wrote: »

Anyone care to speculate on what remedy the Government will come up with?
I’m guessing that putting people back in their original schemes and a refund of the increased contributions is favourite?
Or is it?

Well having been 'compulsory dumped' into the Alpha Scheme in 2015 your guess above would definitely be my favourite !!

Dazed_and_confused

Do you really think it will be that generous?

Looking at the basics of the PCSPS it seems that you build up a fair bit more pension under the new Alpha scheme but don't get an automatic lump sum and have to wait till you're 67 to get it (without actuarial reduction).

By comparison Classic doesn't accrue nearly as much but there is an automatic lump sum to compensate and you can get the money at age 60.

I suspect a lot of people would be chuffed to have 7 years knocked off their working lives even if it means a bit less pension.

JCUK

There's information coming out of the Police Pensions challenge showing up on Twitter, which suggests that putting everyone back on the original schemes will happen. How long for is not resolved, though, and I haven't seen anything about whether the increased contributions count as part of the shift to the new schemes or not.

sammyjammy

I've done some calculations for myself and colleagues based on how we stand now and where we would have been financially if we had stayed in Classic with its 60yr pension age.


None of us breakeven financially until and if we live till 95.


I don't believe they will move us back to Classic as the additional cost will continue for potentially 50 years or more, although will obviously reduce year on year once everyone has retired.


At the age of 67 I will have received over £65k less than if I had stayed on Classic.


The biggest issue is generally that many people that would have got a full classic pension at 60 will not be able to retire at that age, the reduced lump sum alone might be the difference between having been able to pay off mortgage/debt or not.

Turned_out_nice.

There must also be people like myself. In classic for 37.5 years than in Alpha for 13 months and have since left Government employment and working elsewhere.
How are all the different scenarios going to paid out evenly?

german_keeper

Turned_out_nice. wrote: »

There must also be people like myself. In classic for 37.5 years than in Alpha for 13 months and have since left Government employment and working elsewhere.
How are all the different scenarios going to paid out evenly?

I agree entirely, no idea how this will eventually affect me. I had 32.5 years in Classic by April 2015. 9 years in Alpha would have given me £3.8k pa at age 60 with 7 years AR applied. In Partnership I would get about £50k paid in between me and employer by the age of 60. That would then allow me to drawdown over 7k per year from 60 to 67. Also 3% contribution rate rather than 5.45%.

I was covered by Transitional arrangements but at that time you couldn't go direct from Classic to Partnership. I thought long and hard about it but my wife has a decent preserved DB pension from when she worked at Norwich Union payable at 60, and both of us are entitled to full state pension at 67. So in order to facilitate going at 60 and equalise our retirement income rather than have a large difference pre and post SPA I decided to forego about 3 years extra Classic and had to go into Alpha for 6 months in order to then move to Partnership.

Had I been able to stay in Classic till 60 as per Plan A then of course I would have. Can't help thinking that if we do get a favourable outcome I am still going to have a hell of a battle on my hands.

Tromking

Rumours in my area of the Civil Service that the remedy will be compensation and stay on the new scheme or alternatively the option to insist on being returned to your original scheme if that's your personal preference.

german_keeper

Tromking wrote: »

Rumours in my area of the Civil Service that the remedy will be compensation and stay on the new scheme or alternatively the option to insist on being returned to your original scheme if that's your personal preference.

Blimey, if that happened the calculators would be out and endless discussions with colleagues would begin yet again!! Even less proper work done by us lazy civil servants.

Thicko2

I thought I would repost one of mine when this issue was last raised.

'It is an interesting one this. It is complicated to work out how each individual will be affected by this if the plan is to 'make good' the discrimination suffered by the younger members without transitional protection.

You need to remember that pension value revision under the new CARE schemes, e.g. in the NHS CPI plus 1.5%, has probably seen more pension growth than what they would have received in wage growth when wages have been flattish (would have been the basis for the pensions pre the 2015 CARE schemes) . For people at the top of bands in NHS they would have probably seen wage growth of: 1% increase in 2015/16, 1% in 2016/17, 1% in 2017/18, 2% in 2018/19. However no automatic lump sum in the 2015 CARE scheme and for an accurate analysis you probably need to take into account an early reduction for the 2015 scheme to be payable at 60 to allow direct comparison with the 1995 final salary scheme.

I suspect if your salary has increased due to promotion etc, over the period you will be more affected than the wage growth highlighted above.

In my circumstances with promotion my salary increased at probably double the rate of the above inflation. Adjusting for early payment the actual yearly payable pension was within 2% of the direct comparison, but the lump sum probably the best part of 19% lower (the 2015 CARE scheme has no lump sum). This is all based on pension earned to 2019. i.e. 4 years in the CARE scheme, 21 in the old scheme.

In my case i have another 12 years to 60. I suspect salary growth or lack of it will either widen or close this gap.'


I suspect that the uniqueness of how the 2015 changes affected each individual demands a specific offer tailored offer to each individual.

If I was the government i would want to keep the new 2015 schemes as they are, and to offer compensation only those who are affected adversely.

The low or zero payrises from 2015 to 2018 is probably a big issue, versus CPI + 1.5% revaluation in NHS, improved 1/54 accrual rate, but these are offset by the later age which you can withdraw the income (or a need to calculate and include the actuarial reduction at 60 for an equal comparison).

I suspect that because the schemes have delivered under the cost cap, this will be used to support these costs. Whether that is a fair and equitable use of this headroom is a point for debate.

Prior to this judgement the talk in the NHS scheme was that for the next round of 4 years, the accrual rate would improve to 1/48ths to compensate for being under the cost cap.

How the hell you work out tax implications on any form of compensation i cannot possibly work out!

Tromking

Thicko2 wrote: »

I suspect that the uniqueness of how the 2015 changes affected each individual demands a specific offer tailored offer to each individual.

If I was the government i would want to keep the new 2015 schemes as they are, and to offer compensation only those who are affected adversely.

Your point about about differing wage growth is well made, but there were benefits of the old FS scheme's that made the move to the CARE scheme's less generous for everyone regardless. I'm thinking of the quite major changes in the criteria for granting ill health retirement specifically.