Finding Advice on the McCloud judgement

Suffol

I'm nearing the end of my lengthy career in a government department (36 years' service - likely to retire in 2024 or 2025, by which time I'll be in my early sixties). I'm slap bang in the middle of the demographic affected by the McCloud judgement, and now (in my department at least) people like me are being asked to share whether / how the thing has affected their retirement plans. I have no idea, because I don't understand the issue in any way at all. Under transitional protection, I've stayed in classic until now, but have just been moved over to Alpha. I think it's time to get independent advice, but I don't know where to look (not a union member). All of the advisers I've looked at seem to be less about public-sector pensions and more about annuities and defined contribution advice. I've never bought added years, and don't need to now - lucky enough to be on an OK salary at this point, and happy I'll be fine with the approx size of pension / lump sum.  Can anyone point me towards a means of locating a suitable adviser? - I think I need a PCSPS specialist, I'm sure such things exist, but I don't know how to find one...! Thanks in advance for any advice at all...

Marcon

Suffol said:

I'm nearing the end of my lengthy career in a government department (36 years' service - likely to retire in 2024 or 2025, by which time I'll be in my early sixties). I'm slap bang in the middle of the demographic affected by the McCloud judgement, and now (in my department at least) people like me are being asked to share whether / how the thing has affected their retirement plans. I have no idea, because I don't understand the issue in any way at all. Under transitional protection, I've stayed in classic until now, but have just been moved over to Alpha. I think it's time to get independent advice, but I don't know where to look (not a union member). All of the advisers I've looked at seem to be less about public-sector pensions and more about annuities and defined contribution advice. I've never bought added years, and don't need to now - lucky enough to be on an OK salary at this point, and happy I'll be fine with the approx size of pension / lump sum.  Can anyone point me towards a means of locating a suitable adviser? - I think I need a PCSPS specialist, I'm sure such things exist, but I don't know how to find one...! Thanks in advance for any advice at all...

Not clear from your post why you need an adviser, or why you need one now? You don't have to 'share' how the judgement has impacted on your retirement plans - you can simply say you don't yet know.

german_keeper

You don't need to make the decision until you retire and pension providers (in our case My CSP) have been told by the govt. that Annual Benefit Statements in future have to contain details of both Alpha and legacy schemes. For bog standard cases they already hold all the info they need, reckonable earnings and CPI figures, so I reckon even MyCSP should be capable of that. Non bog standard cases I'm not so sure.  

Suffol

Marcon said:

Suffol said:

I'm nearing the end of my lengthy career in a government department (36 years' service - likely to retire in 2024 or 2025, by which time I'll be in my early sixties). I'm slap bang in the middle of the demographic affected by the McCloud judgement, and now (in my department at least) people like me are being asked to share whether / how the thing has affected their retirement plans. I have no idea, because I don't understand the issue in any way at all. Under transitional protection, I've stayed in classic until now, but have just been moved over to Alpha. I think it's time to get independent advice, but I don't know where to look (not a union member). All of the advisers I've looked at seem to be less about public-sector pensions and more about annuities and defined contribution advice. I've never bought added years, and don't need to now - lucky enough to be on an OK salary at this point, and happy I'll be fine with the approx size of pension / lump sum.  Can anyone point me towards a means of locating a suitable adviser? - I think I need a PCSPS specialist, I'm sure such things exist, but I don't know how to find one...! Thanks in advance for any advice at all...

Not clear from your post why you need an adviser, or why you need one now? You don't have to 'share' how the judgement has impacted on your retirement plans - you can simply say you don't yet know.

I think what's worried me is there's a definite implication that McCloud *might* change my plans. Maybe it will - maybe I should plan to stay longer, maybe closer to my state pension age (67), or go earlier, potentially just past 60? Lots of modelling tools on the portal, but not one (yet) which illustrates the differences between staying classic between 2015 and 2022, or going to Alpha for all of that time. As it happens, 2022 contains my 60th, so is the earliest I could go without reduction under classic. I'm conflicted about whether to retire ASAP or stay longer -still enjoying work a lot, but well-aware that there's lots more to do *other* than work that I'd (probably) enjoy equally. Maybe significant financial differences between the options could help me decide... Or maybe not. I just don't understand enough about it, thus advice from an adviser might help.

hyubh

Suffol said:

I'm nearing the end of my lengthy career in a government department (36 years' service - likely to retire in 2024 or 2025, by which time I'll be in my early sixties). I'm slap bang in the middle of the demographic affected by the McCloud judgement, and now (in my department at least) people like me are being asked to share whether / how the thing has affected their retirement plans. I have no idea, because I don't understand the issue in any way at all. Under transitional protection, I've stayed in classic until now, but have just been moved over to Alpha.

Everyone will be moved back into the 'reformed' schemes in 2022, so for you, we're talking about just over a year near the end additionally in Alpha vs. still in Classic (but either way, your Classic final pensionable pay is still calculated as if you were in Classic to the very end). In all honestly, unless during those 13 months you unexpectedly come to avail yourself of Classic's weaker ill health retirement terms, I'd imagine Alpha's much higher accrual rate will be preferable - and so even after the actuarial reduction applicable if you were to take everything at your Classic NPA.

I think it's time to get independent advice,

I genuinely think that would be a waste of money. For a start, you will only need to make a choice at the end, when (as others suggest) the administrator will presumably have details of the effect of choosing one or the other at hand to give you.

hugheskevi

I think what's worried me is there's a definite implication that McCloud *might* change my plans. Maybe it will - maybe I should plan to stay longer, maybe closer to my state pension age (67), or go earlier, potentially just past 60? Lots of modelling tools on the portal, but not one (yet) which illustrates the differences between staying classic between 2015 and 2022, or going to Alpha for all of that time. As it happens, 2022 contains my 60th, so is the earliest I could go without reduction under classic. I'm conflicted about whether to retire ASAP or stay longer -still enjoying work a lot, but well-aware that there's lots more to do *other* than work that I'd (probably) enjoy equally. Maybe significant financial differences between the options could help me decide... Or maybe not. I just don't understand enough about it, thus advice from an adviser might help.

I think your main concern is what to do with your classic pension at age 60. If you do nothing, you simply lose the classic pension you could have received at age 60 until such time as you start to claim it - there is no actuarial uplift or arrears paid when you do claim the pension at a later date. So you are essentially working for nothing until you earn more than the classic pension you could have received.

That makes partial retirement potentially attractive, drawing the classic pension and choosing hours so as to avoid abatement. Alternatively, switching to Partnership before age 60 would mean you would receive arrears back to age 60 when you claim the pension, or could claim the pension at age 60 without abatement - but then you do not benefit from alpha pension accrual which is very valuable for those in their 60s.

Personally I've never heard an adviser who could correctly detail the intricacies of the classic rules around 60, partial retirement, abatement and the implications of switching to Partnership before age 60.

Suffol

OK, many thanks for the advice - although having started to research (always a dangerous thing...) I've now begun to fret about potentially breaching the Pension LTA  - which I'd never even heard of until now...!

hugheskevi

Suffol said:

OK, many thanks for the advice - although having started to research (always a dangerous thing...) I've now begun to fret about potentially breaching the Pension LTA  - which I'd never even heard of until now...!

If you are in the territory of LTA being an issue, then the Annual Allowance may be an issue now you have moved over to alpha, so you probably want to research that too in order so you know what to expect when a Pension Saving Statement arrives.

Anyone earning over £108,000 in alpha breaches the Annual Allowance every year, and may breach at lower levels if their salary increases (which increases the value of past final salary linked pension).

Suffol

hugheskevi said:

Suffol said:

OK, many thanks for the advice - although having started to research (always a dangerous thing...) I've now begun to fret about potentially breaching the Pension LTA  - which I'd never even heard of until now...!

If you are in the territory of LTA being an issue, then the Annual Allowance may be an issue now you have moved over to alpha, so you probably want to research that too in order so you know what to expect when a Pension Saving Statement arrives.

Anyone earning over £108,000 in alpha breaches the Annual Allowance every year, and may breach at lower levels if their salary increases (which increases the value of past final salary linked pension).

Yes, that's what I now realise - has been less of a problem in classic, although I got warnings a couple of years when I got close to / over the annual limit (pay has see-sawed a bit for complicated reasons, but in both cases I managed to avoid a  charge because of lower previous years). Do you suggest advice for that aspect, even if I don't need to worry about McCloud? Or is there nothing I can do about it other than try to avoid earning above it (which is an option for me / refusing extra hours etc)?

hugheskevi

Yes, that's what I now realise - has been less of a problem in classic, although I got warnings a couple of years when I got close to / over the annual limit (pay has see-sawed a bit for complicated reasons, but in both cases I managed to avoid a  charge because of lower previous years). Do you suggest advice for that aspect, even if I don't need to worry about McCloud? Or is there nothing I can do about it other than try to avoid earning above it (which is an option for me / refusing extra hours etc)?

I really think you will struggle to even find anyone to give you advice on all of this, let alone good advice - especially with the further unknown variables of how McCloud may affect decisions. I suspect it will be something you need to decide for yourself.

I'd start with the question of what you do about classic pension at age 60, as that might solve any Annual Allowance problem and mitigate an LTA problem. LTA issue may suggest commencing alpha early when thinking about age 60, and note that alpha is not subject to abatement.

xylophone

Have you obtained a state pension forecast?
https://www.gov.uk/check-state-pension