Treasury response to consultation on the McCloud Pension ruling

OldBeanz

german_keeper said:

Hopefully for the civil service scheme the pension provider MyCSP will be able to incorporate this on the Annual Benefit Statement in future. Seems to me all that is needed is the annual earnings and CPI rate for the 7 year period concerned and then the annual CPI uprate after 2022. That would enable accurate calculation of Alpha. Legacy schemes would be easier with just salary at retirement multiplied by 7/80 or 7/60.

I suppose AR may also be relevant in Alpha for those wishing to retire prior to SPA so that may be a bit more tricky. 

I assume you haven't had too many dealings with MyCSP then.

hugheskevi

westv said:

My wife has mentioned in passing that, when she started, the Classic NRA was 57. I assume that's no longer the case.

It has always been NPA 60.

hugheskevi

I'm sure someone posted on an earlier thread that Alpha taken at 60 with actuarial reduction may be worth more than Classic would be.  Without the lump sum of course.

Not just 'may be' but this is usually the case for members who have recently moved across to alpha.

Due to the final salary link being retained for past service once a member moves to alpha, even if someone is promoted after moving to alpha and gets a decent pay increase (ie pushes equation in favour of a final salary pension), alpha with reduction is still commonly better than classic (with lump sum) in value terms. The automatic lump sum in classic complicates things though, and most people compare classic and alpha by forcing alpha commutation at 12:1 to give the same lump sum as classic which starts to reduce value of alpha.

Most people equate tax free lump sum with being good, and actuarial reduction as being bad, and most don't get past that to objectively compare a higher alpha income against a much lower classic income that comes with lump sum.

diddyflanker

german_keeper said:

Hopefully for the civil service scheme the pension provider MyCSP will be able to incorporate this on the Annual Benefit Statement in future. Seems to me all that is needed is the annual earnings and CPI rate for the 7 year period concerned and then the annual CPI uprate after 2022. That would enable accurate calculation of Alpha. Legacy schemes would be easier with just salary at retirement multiplied by 7/80 or 7/60.

I suppose AR may also be relevant in Alpha for those wishing to retire prior to SPA so that may be a bit more tricky. 

The schemes have to provide details of what the benefits would be under the different options, though they have until 1 October 2023 to sort out how they will do this:

"2.65 Making the choice between legacy and reformed scheme benefits at the point a pension comes into payment means that the majority of members in scope of remedy will not confirm the benefits they will receive until they take those benefits (although they would know the value of the benefits available to them under both options). Respondents raised this uncertainty as a concern with this proposal. To mitigate against this uncertainty, the government will require schemes to provide details annually of the accrued benefits available to members in relation to relevant service for both the legacy and reformed scheme. This will provide members with visibility over their expected benefit entitlements for the remedy period in advance of their decision. Further detail on this is provided in Annex A."