Reduction in 'accrued classic' civil service pension as I was moved to alpha.

Baikal69

Any insight gratefully received.....

...I have (thought I had) a reserved pension pot in 'Classic' which I had accrued over 18.5 years.  I left the service in December 2013 and re-joined in April 2018.  My 'Classic ABS' documents have been presented as they should have been, showing incremental rises as would be expected, each year.  The last correct ABS was sent out in Feb. 2021.  They are now telling me as I re-joined within 5 years of leaving my last post that the salaries are now linked.  And they have reduced my pension by over £1570.  How can this be? I thought that once your pension was attained that was that, the initial pension in the classic was achieved through my time in my previous post, how can that now be undermined?

NedS

I'm not 100% sure as I'm not a member of classic, but as I understand classic is a final salary scheme linked to number of years service and your final salary. So whilst a member of the scheme, your pension will increase with years service and any pay increases. Once you leave the scheme (deferred member) then your pension rises with inflation each year. So, if your salary did/does not increase with inflation (due to pay freeze) then a deferred pension may rise faster than one that is not deferred (but not incrementing with additional years service as you weren't working). Is that what has happened here?

Baikal69

The issue is - how can a pension pot (Classic) that has been paid into and has had inflationary increments, although dererred and presumed with preserved rights, and no longer paid into since December 2013, be influenced and subsequently REDUCED by over 1.5k,  by entering into another scheme 4 years 3 months later.  I am bemused.   

NedS

I think it's because it's linked due to the period in deferment being less than 5 years and you rejoining the scheme. If the salary for your post had increased by more than inflation you'd be better off rather than worse off.

Dazed_and_C0nfused

It may well be correct.  However as you keep referring to a pension "pot" in relation to a DB scheme I'm not entirely sure if you will have understood your forecast correctly or what the intimate final outcome could be.

https://www.legislation.gov.uk/ukpga/2013/25/notes/division/5/13/9

hugheskevi

When you left, the classic pension was calculated as at date of leaving based on your final salary and years of service at that time. It subsequently increased in line each year with CPI.

As you rejoined within 5 years of leaving, the deferred award was cancelled (in line with scheme rules).

Hence your classic pension is now calculated based on your qualifying years (still 18.5, as new service is probably in alpha unless you are close to age 60) and your final salary as now calculated (best salary in last 3 years, calculated by ignoring gap in service and starting with your salary in last 12 months, then stepping back 91 days, looking back at salary over previous 12 months to that date, and repeating until all best salaries in last 3 years have been calculated - if a past salary is highest, it is increased in line with CPI to the current date).

Your Annual Benefit Statement however will just show your classic pension calculated on years of service and your salary as at 31st March.

hyubh

Baikal69 said:

I have (thought I had) a reserved pension pot in 'Classic' which I had accrued over 18.5 years.  I left the service in December 2013 and re-joined in April 2018.  My 'Classic ABS' documents have been presented as they should have been, showing incremental rises as would be expected, each year.  The last correct ABS was sent out in Feb. 2021.  They are now telling me as I re-joined within 5 years of leaving my last post that the salaries are now linked.  And they have reduced my pension by over £1570.  How can this be? I thought that once your pension was attained that was that, the initial pension in the classic was achieved through my time in my previous post, how can that now be undermined?

Once a Classic pension is preserved, then yes, it increases by inflation each year. In the 18.5 years prior to that however, the value of each year of membership was dependant on your final full time equivalent salary (however that is defined under the rules of the scheme - it isn't literally the full time equivalent salary on your last day of active membership). So the value of your pensionable service for 1998/99, 1999/00, 2000/01, etc., was all dependant on your pay on leaving in 2013.

As MyCSP's explanation says, since you rejoined in under 5 years, the final pay link is restored for your Classic service, i.e. it's as if your pension was never preserved, and instead, those 4 years 3 months was a service break within one continuous membership. This isn't to say you are once again accruing Classic service (you're aren't, you're in Alpha), just that the value of the Classic service you already had is once again dependant on your final full time equivalent salary.

That said, have you actually rejoined on a lower grade than before...? And if you are part time, doe your latest statements reflect that in showing what your Classic pension currently is (remembering your Classic final pay is full time equivalent)...?