Civil Service Pension - Bomb proof ?

TELLIT01

I've seen many claims on these boards that Civil Service pensions are bomb proof and that those in receipt of them will live happily ever after with increases actually improving the situation of the recipient.  Well I've just had a letter showing my increase and it's the princely sum of £90 per year!  It may be true that those who spent a lifetime with the CS and are now retired, or coming up to retiring, have a great pension.  It is certainly not the case for those joining now, or having joined in the past 15 years or so.

MX5huggy

You have a small pension, increasing by September 2021 CPI figure if 3.1%, this Septembers figure will be more than double. 

Lemon_dr1zzle

You will need to provide further information. Are you an active member? Are you comparing your March 2021 figure with your new pension at March 2022? 

Golactico

Assuming you're in the Alpha scheme, it accrues at a rate of 2.32% of your salary per year. On top of that, you get year on year increases at the CPI rate. When you retire, you get whatever you have accumulated guaranteed for life and increased each year by CPI. If you think this is a poor deal, speak to others in the private sector about their pension arrangements - they'd love to have access to a pension like yours!

Take it from a fellow Civil Servant. It might not be quite as good as it was prior to the 2015 reforms, but you still have a really good pension!

p00hsticks

TELLIT01 said:

I've seen many claims on these boards that Civil Service pensions are bomb proof and that those in receipt of them will live happily ever after with increases actually improving the situation of the recipient.

I think you might be exaggerating just a tad there.

Whilst it's true that Civil service pensions beat most others into a cocked hat, I doubt that many on these boards have said that increases will always improve the recipient's situation. Most Defined benefit pensions are index-linked but capped at a certain percentage, so in periods of high inflation their value in real terms is going to be eroded to some extent. And annual increases are always going to lag behind the current rate of inflation.

I suspect many looking at their DC pensions at the moment and seeing no rise at all but sometimes considerable falls would still give their eye teeth to be in your position though...

JoeCrystal

TELLIT01 said:

I've seen many claims on these boards that Civil Service pensions are bomb proof and that those in receipt of them will live happily ever after with increases actually improving the situation of the recipient.  Well I've just had a letter showing my increase and it's the princely sum of £90 per year!  It may be true that those who spent a lifetime with the CS and are now retired, or coming up to retiring, have a great pension.  It is certainly not the case for those joining now, or having joined in the past 15 years or so.

The new joiners or recently joined in the past 15 years can still get a great pension. It is bombproof that it will never run out of money since all fundings for the pensions are from the HM Treasury aka taxpayers and that you will already maintain the index-linked pension in today's term. It is very cheap for the employee to pay in terms of what they will get back in due course. The pension provision is the main attraction for working in the Civil Service anyway as far as I am concerned.

jimi_man

The £90 increase means absolutely nothing without context as to how much pension it was applied to. Using the 3.1% figure that makes it around £870 or so. 

If you’re still accruing then those increases will be applied to all all your yearly ‘accruals’ and all future ones. 

If you’re in receipt of your pension then it’s clearly a very small one, hence the tiny increase. 

I don’t think anything is bomb proof. But as pensions go it’s pretty good. Defined benefit, index linked with no cap and low contribution rate. As public sector pensions go it’s reasonable too. Not the best but definitely not the worst. 

hyubh

p00hsticks said:

Whilst it's true that Civil service pensions beat most others into a cocked hat, I doubt that many on these boards have said that increases will always improve the recipient's situation. Most Defined benefit pensions are index-linked but capped at a certain percentage, so in periods of high inflation their value in real terms is going to be eroded to some extent.

Just to be clear, public sector scheme increases are not capped. This is a fundamentally superior position to statutory minimum increases when inflation is not very low.

And annual increases are always going to lag behind the current rate of inflation.

If after this September inflation fell back, the increase applied next April will still remain the higher CPI figure for September. 

TELLIT01

What I should have added is that I have a pension from another former employer which has increased by more than the CS pension.  The comments about superb CS pension tend to come when somebody asks questions on the Employment board about potentially working for the CS.  I'm simply making the point that there are many employers out there who had pension schemes equally as good as that.

drummersdale

Funnily enough I was thinking about this subject myself this morning so this post is very relevant - and I agree with other contributors that perhaps it depends on your length of service, salary, etc.  In my particular case I am looking to partially retire this year with a pension in the region of c£25k - if the forecasts are accurate then the CPI rate in September (which will then be applied to the pension in April) would be in the region of 7-8% so potentially an annual increase of £2,000 which is significantly more than any pay rise would be. I realise it would all be swallowed up by raging inflation anyway but not that shabby compared to some. I’m very thankful - or will be when I eventually get it!

Thrugelmir

My DB scheme has a fixed annual revaluation of 5%. Swings and roundabouts.