Classic and Alpha pension leaving CS mid-year

m_c_s

Just wanted to check the likely calculation of final salary and career average deferred pensions when leaving CS mid year:

Leaving CS end of October

Classic benefits £15000
Alpha benefits £5000

Both will be deferred parts from November.
Will the annual inflation uplift in the deferred parts of pensions from November to end of March 2023 be: 
Classic £15000 * (CPI*5/12) i.e. pro rata of 5 months out of 12 months November to end of March?
Alpha £5000 * (CPI*5/12) i.e. pro rata of 5 out of 12 months November to end of March?

CPI being inflation at September 2022

NedS

For Alpha at least, I want to say it makes no difference (happy to be corrected though if that is not the case). Your Alpha pension is increased each year by CPI regardless of whether you are an active member or have a preserved pension (deferred member). So if you were to leave the scheme in November 2022, at the end of the tax year (April 2023), 2.32% of your pensionable salary for the year (April - Oct) would be added to your total and the whole amount increased by September's CPI inflation figure.

https://www.civilservicepensionscheme.org.uk/knowledge-centre/pension-schemes/alpha-scheme-guide/leaving-the-scheme-section-04/leaving-with-two-or-more-years-service-section-04b/

I'm not sure how Classic works - maybe @hugheskevi will drop by and offer their wisdom

hugheskevi

I'm not 100% certain. I agree with NedS' assessment of alpha.

The Public Service Pension Increase tables suggest it is a simple pro-rata, so I would say that applies to classic too.

Scrounger

Regarding classic; I have today emailed  myCSP asking for clarification of how the 2023 increase will be applied the classic pension & lump sum (when pension taken prior to 10 April 23) and if there is a 'second bite' lump sum etc.

Once I receive a response I'll update with what they have to say.

Scrounger

kassy64

If you are not taking the Classic pension in November (deferring to take at a later date) , then your annual Classic pension will be calculated from your salary and worked out on best of last 3 years - going back from October, this will be your Classic annual pension and will be linked to CPI next April, the fact that you retired part way through the year is irrelevant.

Scrounger

@kassy64 - The query was concerning the lump sum (3 x annual pension, tax free). Specifically: how the April 23 CPI increase would be implemented if taking the pension before 10 April 23 for deferred classic members such as myself.

Earlier discussion here:
http://forums.moneysavingexpert.com/discussion/comment/79404456#Comment_79404456

Can you throw any light on this please @kassy64 ?

Scrounger

kassy64

Scrounger said:

@kassy64 - The query was concerning the lump sum (3 x annual pension, tax free). Specifically: how the April 23 CPI increase would be implemented if taking the pension before 10 April 23 for deferred classic members such as myself.

Earlier discussion here:
http://forums.moneysavingexpert.com/discussion/comment/79404456#Comment_79404456

Can you throw any light on this please @kassy64 ?

Scrounger

I've just been reading through these posts myself.
So, am I right in thinking that in my situation I am taking my deferred pension and the lump sums now from 1st September. These will have had the last years increase of 3.1% already accounted for. Is the situation that my lump sum payment (or a portion of it 7/12ths) will be uplifted by next years CPI increase. Or, have i got the wrong end of the stick completely?

kassy64

Can't get my head around how a Deferred lump sum pension payment taken for example in Sept 2022 would be eligible for a CPI uplift in April next year (possibly 10%+). Do pension payments work in arrears rather than for the year ahead?

Scrounger

kassy64 said:

Can't get my head around how a Deferred lump sum pension payment taken for example in Sept 2022 would be eligible for a CPI uplift in April next year (possibly 10%+). Do pension payments work in arrears rather than for the year ahead?

This is what I'm trying to clarify with myCSP.

My gut feeling is that your classic lump sum if taken in Sept 22 wouldn't get the April '23 uplift as it is a one-off event.   And @Silvertabby has confirmed that this would indeed be the case with the LGPS.  :'(

Scrounger

kassy64

I meet up with old civil service colleagues (who have retired) regularly and pension conversations crop up regularly.
Not once has anyone ever mentioned getting an 'uplift' to their lump sum the following April after taking retirement mid year.

Scrounger

I concur with your comments and observations.

Pending a response from myCSP, would you consider deferring a little longer until 11 April 2023 if you want the extra (tax free) cash @kassy64 ?

Scrounger