Is there any benefit in taking my civil service pension early ?

zagubov

I took my pension a year early, It was TPS and I realised rather late I could retire at 60.
Took it a year early and knew it would be reduced by about 4% for life.
No regrets whatsoever.
Went back to the same job and am reducing my days as the years go by.

Scrounger

Scrounger said:

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

I have now received a reply from myCSP and they have informed me that the classic pension lump sum does not increase after scheme age (60)    :

"Thank you for your recent enquiry.

You are able to defer your pension up to a maximum age of 75.

If you choose to defer your pension, it is important to note that the normal pension age for your scheme is 60. Your annual pension attracts pension increases from your 55th birthday which continue past your scheme age. However any lump sum payments due only attract increases up to your scheme age.

Your pension will be paid in arrears and backdated to your 60th birthday. You annual pension will increase in value each year in line with inflation. However the arrears payment will be calculated as if the pension had been claimed at 60, reflecting the correct inflation rates applicable.

It is also worth noting that whilst the lump sum is tax free, the pension does count towards your taxable income. So if you receive a large arrears payment, it will count towards one single year’s taxable income.

If you have any other questions please let us know."


Comments invited...


Scrounger

sevenhills

zagubov said:

Took it a year early, no regrets whatsoever.
Went back to the same job and am reducing my days as the years go by.

Is that because you needed the money if you reduced your hours?
I am 60, is there any benefit from retiring at 61 and claiming my pension, but going back to work?

MrStanners

I'm resurrecting this thread to try to understand about the Civil Service pension inflation increase and how it might affect me.

I have a small deferred CS Classic pension from many years ago.  My 60th birthday is in March 2023.  I will get a pension plus lump worth 3 years pension i.e. 36 months worth.

I initially thought that if I delay claiming my pension by one month, until 10th April, then the September CPI (assume 10%) will be applied to the lump sum. Therefore although I miss one month's pension I would gain a lump sum which is 10% bigger i.e. I get a lump sum bigger by 3.6 months.

So overall I gain 2.6 months extra by delaying by one month?

However I've since found this thread and the myCSP statement quoted by @Scrounger.
"However any lump sum payments due only attract increases up to your scheme age."

Does that mean that my lump sum wouldn't increase so I shouldn't wait one month before claiming my pension?

Yesterday I received a letter from Civil Service Pensions inviting me to claim my pension so I'm trying to figure out what date it is best for me to put down.  As I said earlier it is a very small pension so either way won't make a huge difference. 

Dazed_and_C0nfused

MrStanners said:

I'm resurrecting this thread to try to understand about the Civil Service pension inflation increase and how it might affect me.

I have a small deferred CS Classic pension from many years ago.  My 60th birthday is in March 2023.  I will get a pension plus lump worth 3 years pension i.e. 36 months worth.

I initially thought that if I delay claiming my pension by one month, until 10th April, then the September CPI (assume 10%) will be applied to the lump sum. Therefore although I miss one month's pension I would gain a lump sum which is 10% bigger i.e. I get a lump sum bigger by 3.6 months.

So overall I gain 2.6 months extra by delaying by one month?

However I've since found this thread and the myCSP statement quoted by @Scrounger.
"However any lump sum payments due only attract increases up to your scheme age."

Does that mean that my lump sum wouldn't increase so I shouldn't wait one month before claiming my pension?

Yesterday I received a letter from Civil Service Pensions inviting me to claim my pension so I'm trying to figure out what date it is best for me to put down.  As I said earlier it is a very small pension so either way won't make a huge difference. 

This has puzzled me and I think @hugheskevi explained on an old thread that the pension (and lump sum) paid in the first year (2022:23) will have 11/12ths of the April 2023 increase applied and then from April you will only get 1/12th of the "pension in payment" increase.

The following April you will get the full pension in payment increase.

Hopefully @hugheskevi will clarify 🙂

hugheskevi

Dazed_and_C0nfused said:

MrStanners said:

I'm resurrecting this thread to try to understand about the Civil Service pension inflation increase and how it might affect me.

I have a small deferred CS Classic pension from many years ago.  My 60th birthday is in March 2023.  I will get a pension plus lump worth 3 years pension i.e. 36 months worth.

I initially thought that if I delay claiming my pension by one month, until 10th April, then the September CPI (assume 10%) will be applied to the lump sum. Therefore although I miss one month's pension I would gain a lump sum which is 10% bigger i.e. I get a lump sum bigger by 3.6 months.

So overall I gain 2.6 months extra by delaying by one month?

However I've since found this thread and the myCSP statement quoted by @Scrounger.
"However any lump sum payments due only attract increases up to your scheme age."

Does that mean that my lump sum wouldn't increase so I shouldn't wait one month before claiming my pension?

Yesterday I received a letter from Civil Service Pensions inviting me to claim my pension so I'm trying to figure out what date it is best for me to put down.  As I said earlier it is a very small pension so either way won't make a huge difference. 

This has puzzled me and I think @hugheskevi explained on an old thread that the pension (and lump sum) paid in the first year (2022:23) will have 11/12ths of the April 2023 increase applied and then from April you will only get 1/12th of the "pension in payment" increase.

The following April you will get the full pension in payment increase.

Hopefully @hugheskevi will clarify 🙂

Yes, that is my understanding. If the pension is claimed in March 2023 at age 60, it would be revalued to the date of claim (by March the revaluation tables should all be published) and the pension paid on that basis. There would then be a very small increase to the pension in April, representing indexation due between March and April (ie about 1/12 of the annual increase, as 11/12ths would have been paid through revaluation).

But it is best to get these sorts of things in writing from the scheme administrator - although that can be easier said than done, as the scheme administor has a tendency to respond with an answer to a question they know the answer to, rather than the question a member actually asked.

MrStanners

Thanks for the replies @Dazed_and_C0nfused and @hugheskevi.
Your description of how you think it works makes sense, and I note the recommendation to ask them directly.

zagubov

sevenhills said:

zagubov said:

Took it a year early, no regrets whatsoever.
Went back to the same job and am reducing my days as the years go by.

Is that because you needed the money if you reduced your hours?
I am 60, is there any benefit from retiring at 61 and claiming my pension, but going back to work?

I initially returned full-time so it was a bit like getting a 45% pay rise with quite reasonably, a big tax hike.

Once I persuaded my employer to adjust my workload, I worked  4 days a week but still made more than my original income.

I'm now down to 3 days and just about making my full-time salary.

I don't understand how you can pay off a mortgage in London on a teacher's salary so I'll still probably be working to my state pension age.