Civil Service Pensions - Deferred AND Current Member

jonnyfive111

Hi, 

I wonder if anyone au fait with civil service pensions may be able to help me. Ive scoured the civil service pension webpages but cant seem to find any guidance on my particular situation.

I'm in a perhaps unusual position of having two civil service pensions. 

1) A deferred Classic pension from first period of service between 2001 and 2012.
2) A current Alpha pension from a second and current period of service from Dec 2018 to present.

My query is regarding whether I can take my deferred pension (lump sum and annual allowance) at 60 which is the standard retirement age for Classic pension, whilst I am still a current employee of the civil service and paying into my current Alpha pension which will pay out at 66/7. They are two distinct periods of employment (I got made redundant first time round). The only advice I can see if for those will Classic pensions that were then transferred into Alpha pensions. My classic is deferred so Im in a different position. Someone had previously advised me that it all depends on a potential qualifying or disqualifying period in-between pensions but I cant seem to find any information about it. They also mentioned it might depend on what pension I was paying into the years inbetween which can have an effect. I paid into a LGPS pension (police) for 6 years inbetween but I cant see how that would have any relevance as its entirely seperate?

My situation is that I ideally I want to carry on working past 60 in my current role, at least part time, but perhaps full time, paying into my Alpha and claiming my Classic. But I cant seem to find out if thats an option. If I deferred collection of my Classic pension as an alternative so that I waited to claim them all together at 66/7, I can't see at what rate my Classic pension would increase each year from having deferred it from 60 to 66/7?

Sorry for so many questions, but if anyone is able to offer a view, Id be very grateful. Thanks!

moo121

Hi Jonny, I don't think your Classic pension will increase if you leave it until after 60 to take it.  However if you do take it then and continue to work full time then expect abatement to come into play such that they will reduce your pension, possibly to zero whilst you receive full time pay.  Rock and hard place comes to mind! 

Could you consider partial retirement? With this you should be able to reduce your hours and take your Classic pension unreduced, whilst continuing to build up Alpha.  Look up your department's rules on this?

My situation was slightly different in that I left CS in 2012,  took my actuarily reduced deferred classic pension in 2016, then went back for a short while 
in 2017, keeping my hours low to avoid abatement and earning a small amount into Alpha which I will probably take when I finally reach 67.   There are some rules around 5 years in terms of linking periods of service for pension, but as I had already taken my Classic pension, no idea if they applied to me, but you have a break in service of over 5 years so your pensions should truly be separate? Looking forward to how the McCloud stuff may deal with me!

Hope this helps a little.

jonnyfive111

Both those replies are really helpful thanks. I admit I hadn't even thought of possible abatement  due to thinking it was an entirely separate deferred pension from a previous period of employment. Again the scheme information isn't very clear for my situation on that either so something else for me to find out. That ultimately may be the bigger deciding factor in the end! I don't have much faith in the CS pension administrators though as the contact I have had with their advisors leaves alot to be desired, not helped by them only accepting email communications now and taking weeks to respond if at all!

I was in employment in March 2012 but excuse my ignorance, although I was aware of her McCloud judgement I don't really understand what it may mean for me?

hugheskevi

jonnyfive111 said:

I was in employment in March 2012 but excuse my ignorance, although I was aware of her McCloud judgement I don't really understand what it may mean for me?

Have a look at this webpage

jonnyfive111

Brill, thanks hugheskevi, I think I get my head round that now. I will email CS Pensions about the abatement situation but whilst I have your attention and you are clearly very knowledgable about it, have you seen anything that gave your view that deferred pensions don't apply to abatement? Thanks!

zubrowka118

Hi Jonny
I'm in the same position
are you any way forward with your pension application or finally claiming it
I'm still waiting from the pensions people to figure out what to do.
best regards

zxdrt

I am in the same position - I have 2 different deferred civil service pensions plus I am an existing member of the Civil service pension and currently work full time in the civil service. The deferred pensions are from 1986 - 1999 when I was TUPE'd in and out of the civil service and is a long and complicated story !  In 1999 I joined an NDPB with its own pension scheme but was again TUPE'd back into the Civil Service in 2017 and am still there. When I first spoke to MyCSP to say I wanted to claim the 2 deferred pensions they said abatement would apply and I wouldn't get the annual pensions unless I reduced my hours but I would get the lump sums from both of them. Based on this I claimed them expecting to get the lump sums but not the annual pension ( until I retired or reduce hours) as this is what they said would happen.  I have just received letters confirming payment of the two deferred pensions both of which suggest the lump sum and the annual pension will be paid from next month.  Am now wondering if they have made a mistake..........

CorseyEdge

hugheskevi said:

It is based around rule 3.11 (my bolding):

3.11 A civil servant who resigns or opts out of the scheme and who

 (i) has two or more years' qualifying service; or

(ii) is a woman civil servant who resigns on or after 6 April 1978 and who leaves the Civil Service after the end of the tax year preceding that in which she attains the age of 60 (notwithstanding that she has not completed 2 years' qualifying service); or

(iii) was formerly entitled to rights under a personal pension scheme in respect of which a transfer payment has been made to this scheme

 and who does not opt to transfer the whole or, under rule 6.2(iv), part of his accrued pension benefits out of this scheme, will be awarded a preserved pension and lump sum in respect of such part of his accrued pension benefits as is not transferred. Subject to rule 3.12, these will be brought into payment when the civil servant reaches the pension age, and will be calculated in the way described in rule 3.1.

The rule doesn't allow for the payment of preserved pension to be delayed. So if it is claimed late, eg at age 66/67 the pension is treated as coming into payment from age 60 and arrears paid.

However, looking at it more closely I think it is only if you had remained in service and opted-out before age 60 that abatement would not apply. As you left service and then rejoined, unfortunately I think abatement does apply (ie contrary to what I said in posts above). I'm not sure of the exact position regarding late claim and arrears, given the leaving of service and rejoining - but that route may still work. The rules in this area are completely inconsistent and hence why it is important to get things in writing from the scheme administrator.

@hugheskevi - Thank you. I'm following this with interest. So is your interpretation of the Scheme rules, that if someone employed in the civil service decided to Opt Out of their Classic pension shortly before their 60th birthday (hence deferring it) and continued as usual in service, they could not only claim their deferred pension (and lump sum) shortly afterwards at 60 and in full, without abatement, but could also carry on working at their current salary full time? 

If so, that is potentially huge for many who have to claim their PCSPS entitlement at 60 and then have to partially retire (e.g. reduce hours) to avoid abatement. That's certainly one way to keep people working longer! Thanks again.

CorseyEdge

@hugheskevi - thank you! Yes I totally agree, gaining reassurance in writing from the scheme administrator, possibly from a definitive senior source (e.g. compliance or oversight teams) would be the absolute first course of action before initiating any opting out. If this is a thing, and I don't doubt you at all, then I am left wondering why non of the CS unions haven't done this already on behalf of their membership.

If you don't mind sharing, I'd be really interested in why abatement doesn't apply in this particular scenario please. Scanning the Scheme rules (Section II you referenced) there are other rules under re-employment such as 3.26 and 3.35 that appear to state the abatement will be applied. There doesn't seem to be anything specific on abatement not applying to opted out civil servants who continue to work. Is this because they aren't deemed as "re-employed"? Would you be willing to share the nuances in the scheme rules that allows this please? 

Thanks again, super insightful - I'm sure there are many, many members who would benefit from this, but don't even know it is an option. As you say hopefully some who have done this will share their experience of doing so. 

njtt

A very interesting discussion!

Based on that interpretation of the rules, I can understand how abatement does not apply when opted out at 60 (thank you).

What I am not clear about now is the relationship with Alpha given how most people who were in Classic will have been transferred into Alpha automatically (and so may have opted out of the pension when an Alpha member).

As I understand that person will be opted out of both schemes (at 60) and could continue to work afterwards with the choice of taking the Classic pension (and lump sum) at the same time as working (with no abatement) or else continuing to work and not taking the Classic pension and lump sum but allowing it to grow and taking it in arrears (subject then to it all falling in that tax year).

But what I am not sure about is if a person is opted out at 60 and takes the deferred Classic pension (and lump sum) and continues to work. Can that person then rejoin the Alpha scheme for the next (up to) 7 years - so that he/she receives a (deferred) Classic pension and pays into the Alpha scheme? There will not have been 5 years between opting out and rejoining but there will also be no pension to rejoin since the pension will already have crystalllised.

Or will that person only be able to continue to work on an unpensioned basis, ie continuing to be opted out?

Does that make sense?

CorseyEdge

It does make sense. I had a similar query. As I understand it they are two very distinct and different pensions schemes. The PCSPS covering Classic, Classic Plus, Premium & nuvos (the Legacy Schemes) and CSOPS (Alpha) introduced in 2015. Both are set out in separate legislation.
My assumption was that when you Opt out of Classic, (breaking the link with final salary), you don't automatically Opt out of Alpha at the same time (unless you explicitly do so). So you can continue working and contributing to Alpha. But now you have me wondering if you have to Opt out of all schemes... Hopefully the very helpful @hugheskevi can help resolve.

I also had a question on Opt out and any decision you make on commutation; I assume that when opting out you forego any ability to commute PCSPS payment to lump sum afterwards (i.e. post-deferred), so I guess you make that choice at the point of opt out? (my head hurts on what any McCloud treatments mean on any of this!)