Civil service classic pension - pensionable salary query

Cotrelone37

Hi, I've been an avid reader of the forum for years but have a question. I've been thinking about switching from the CS Alpha scheme to partnership on 31 March 2023 for my last few years. McCloud will mean classic will be more beneficial to me than Alpha - I'm fortunate to have 25+ years classic service and would have 1 yr Alpha service.

I had pensionable overtime and allowances during the pandemic. My last 3 years earnings in if I do switch to partnership at 31 March 2023 are likely to be:

1/4/20-31/3/21 £43251
1/4/21-31/3/22 £42736
1/4/22-31/3/23 £43163 (assuming 1% pay increase)

I wondered though about the final salary link and if there was anyone who could clarify the fine points of the way the best 365 days out of the last 3 reckonable years form the pensionable salary is calculated. There was some discussion:

https://forums.moneysavingexpert.com/discussion/6305013/preserving-classic-pension-civil-service.

If I opt out on 31 March 2023, am I correct in saying that the 2020-21 earnings will attract pensions increase of 3.1% for 2021-22 and the PI for 2022-23 and be revaluled i.e. Pensionable salary would be £43252 X 1.031 X 22-23 CPI?

Also, if the pay increase for 2022-23 were to be >1% and 2022-23 earnings overtake 2020-21 would the revaluation calc still take place?

Many thanks for any thoughts if I am on the right track here and appreciate quite a specialised question.

hugheskevi

I've been thinking about switching from the CS Alpha scheme to partnership on 31 March 2023 for my last few years.

A very specific date, any particular reason for that, given you can switch at the start of any month?

McCloud will mean classic will be more beneficial to me than Alpha

Are you certain about that? Alpha is often better than classic for those not too far from retirement.

I wondered though about the final salary link and if there was anyone who could clarify the fine points of the way the best 365 days out of the last 3 reckonable years form the pensionable salary is calculated.

Start as at last day of service. Look at pensionable earnings in the 12 months prior to that date. Step back 91 days. Consider the pensionable earnings in the previous year. Keep stepping back 91 days until a period of 3 years prior to last day of service has been considered. The highest value (in cash terms) from all of those step backs is the salary used. If salary is unchanged the most recent figure is used. If a figure from a previous period is used, revalue it to present day.

If I opt out on 31 March 2023, am I correct in saying that the 2020-21 earnings will attract pensions increase of 3.1% for 2021-22 and the PI for 2022-23 and be revaluled i.e. Pensionable salary would be £43252 X 1.031 X 22-23 CPI?

That is the correct principle. The exact value and date will be determined by the step-backs.

Also, if the pay increase for 2022-23 were to be >1% and 2022-23 earnings overtake 2020-21 would the revaluation calc still take place?

In this scenario your most recent year would be the highest in cash terms, even though the previous year would be higher in real terms. As the step-backs consider cash terms to determine highest salary there would be no revaluation.

Note that the Civil Service pay remit for 2022-23 is an average of 2%. You may be able to engineer final pensionable earnings being higher in the earlier year by switching to Partnership before the end of the year.

Cotrelone37

Many thanks hugheskevi for the clarification.

I was on a pensionable allowance from April 20 to April 21 hence my choice of dates but I will need to think carefully about switching dates.

I suspect classic will be more beneficial in my case as I received a promotion in 2017 and I'm not that close to NRA.

Cheers!