Civil Service Annual Benefit Statement (ABS) - Classic Pension

Dazed_and_C0nfused

kassy64 said:

montventoux said:

Kassy 64 - thanks for your post.

Thanks to Dazed_and_C0nfused earlier post I now have a full understanding of how Classic pension is recalculated each year and what my expected 2023 ABS Classic pension figure will be based on my pensionable earnings.

Yes, I am impacted by the McCloud judgement having moved to Alpha on 01/04 2015 after circa 31 years in Classic.  I’m aware I will have an option of accruing a further 7 years of Classic pension benefits for period of 01/04/2015 -31/03/2022 though doing the Maths for my particular circumstances Alpha pension benefits appear to be move favourable  for this period.  That said, I will wait until I have visibility (post October 2023 I believe) of both sets of figures from my MyCSP before making my decision.

I’m now planning my Great Escape, leaving the CS this October (aged 58) after 39 years service though will defer taking my pension benefits until October 2025 (aged 60).

I left at 58 also (started when 17). I have also done some calculations regarding the McLoud ruling and suspect that Alpha and Classic for the period 2015-2022 will be very similar. I took my pension and lump sum for both Classic and Alpha early (18 months early for Classic which made up the large part of my pension). Enjoying life and feel much healthier and happier not doing shifts and weekends and getting up at 5am was a killer. All the best. 

Ps - for info I had to take the Classic and full Alpha at retirement as the McLoud ruling won’t be completed until late 2023. Told that a retrospective quote will be issued then for me to make a decision, all very strange as I will have been taking the pension for 18 months by then. I’m hoping it will be nice and clear as to which option is the most beneficial. For me it will be stay as I have been receiving or revert to Classic. 

I would say with some confidence that it won't say say that in any circumstances.  It will provide you with some factual information, not any advice about what is most beneficial.

You will have to choose which option is best for you.  Remember Alpha accrues nearly double what Classic did.  But has two obvious downsides, normal pension age and lack of automatic PCLS.  But not everyone will have the same view of how negative those aspects are.

It might be the lower amount of Classic pension paid from 60, with a PCLS that suits you.

Or it might be Alpha actuarially reduced at 60.

Or it might be a larger amount Alpha taken at normal pension age.  

Or a whole host of of other options.

Only you will know what is the right one for your personal circumstances/preference.

I suspect a lot of people will want unreduced Classic at 60.  But that isn't necessarily going to be the best option from a financial perspective.

Golactico

In terms of the best McCloud remedy option for me, I have made 20 and 25 year projections of what total benefits (pension and lump sum) I would receive in the two scenarios:

1) Adding the 7 year McCloud period to my existing Classic years' total.
2) keeping things exactly as they are, with Alpha benefits from April 2015 onwards, payable at 67.

Scenario 2 is the clear winner. I will be about £6k better off over 20 years and £20k+ better off at the 25 year mark.

I'm in a lower grade in Civil Service terms and I understand that Alpha favours the lower paid, so obviously people in higher grades may draw different conclusions. However, I think the 20/25 year projection sum is a relatively easy way to ascertain what your best option is.

Dazed_and_C0nfused

I would agree if you'd added an extra word!

But less money from age 60 (with the lure of extra PCLS) will no doubt be more attractive to some.

However, I think the 20/25 year projection sum is a relatively easy way to ascertain what your best option is financially

kassy64

I am presuming that when the 'McLoud' letters start dropping through our post boxes it should (hopefully) be set out in pretty basic terms as a) this is what you have and b) this is what you could have (if you opt for Classic 2015-2022).
As mentioned there will not be any direct financial advice but hopefully the figures that are provided will help everyone affected make the right decision for them.
I was really surprised when i did some quick calculations how close they (even with the much later NPA in Alpha).
I am going to just take what i have currently and see what the offer is and hopefully there will be sufficient time to sit and consider the options and make the right choice.
As a side note, I understand that for those still currently in service the online pension portal will eventually be updated to give you retirement figures for both scenarios. For me as I'm already gone and being paid the Classic and Alpha pension it will just be a matter of sticking with what I'm getting or revert. The funny thing is even if I revert back to Classic I would still have an 'Alpha' pension for April 2022 to August 2022 (4 months or so).
Update- sorry i transitioned on to Alpha in 2017 not 2015 due to my age, so its only a 5 year gap not 7.
Update2 - that begs the question, if Alpha is preferential for me, can I opt to have joined Alpha in 2015 like everyone else? I can't remember being given the option but just told that I can stay on Classic a bit longer than others due to age.

montventoux

Glad to hear your enjoying life and feeling much healthier/happier
Similar to you I entered the CS at 18 and after 38/39 years service I’m done!

I guess there is the drawback of me taking Alpha 7 years earlier than NPA in the sense that it’s actuarially reduced which I believe is around 4% per year though I’m aware there’s the actuarial factor tables available on the CSP website which should provide ‘exact’ figures which I need to look at.

Have done SP forecast and this year will be the final contribution for full SP entitlement.
Planning to bridge the gap to SP by utilising a combination of S&S ISAs and cash savings.

Dazed_and_C0nfused

montventoux said:

Glad to hear your enjoying life and feeling much healthier/happier
Similar to you I entered the CS at 18 and after 38/39 years service I’m done!

I guess there is the drawback of me taking Alpha 7 years earlier than NPA in the sense that it’s actuarially reduced which I believe is around 4% per year though I’m aware there’s the actuarial factor tables available on the CSP website which should provide ‘exact’ figures which I need to look at.

Have done SP forecast and this year will be the final contribution for full SP entitlement.
Planning to bridge the gap to SP by utilising a combination of S&S ISAs and cash savings.

Have you considered a SIPP, if you can get basic rate tax relief now and take the funds out in that bridging period without paying tax (due to spare Personal Allowance) it's far better value.

£2,000 into your ISA is £2,000 income in the bridging period.

£2,000 into a SIPP or personal pension is £2,500 in the bridging period.  With no tax to pay.

Seems a no brainer if you haven't used all your annual (pension) allowance.

kassy64

montventoux said:

"Have done SP forecast and this year will be the final contribution for full SP entitlement.
Planning to bridge the gap to SP by utilising a combination of S&S ISAs and cash savings."

Yes, correct the reduction factor tables are available, I did download them for my calculations.
I took both my Classic and Alpha early and lost about 9% on the Classic, having done 41 years I was still left with a decent pension and lump sum. You are right with current intertest rates where they are (and going upwards) you can get 5% return if you can tie up money for a year or two (minus tax if applicable) on savings, and before anyone mentions it I'm aware inflation is over 10%, but I'm currently getting nearly £400 per month in interest on cash savings and ISA's (mainly from my lump sum), and I'm quite happy with that as a pension top up.

kassy64

Dazed_and_C0nfused said:

montventoux said:

Glad to hear your enjoying life and feeling much healthier/happier
Similar to you I entered the CS at 18 and after 38/39 years service I’m done!

I guess there is the drawback of me taking Alpha 7 years earlier than NPA in the sense that it’s actuarially reduced which I believe is around 4% per year though I’m aware there’s the actuarial factor tables available on the CSP website which should provide ‘exact’ figures which I need to look at.

Have done SP forecast and this year will be the final contribution for full SP entitlement.
Planning to bridge the gap to SP by utilising a combination of S&S ISAs and cash savings.

Have you considered a SIPP, if you can get basic rate tax relief now and take the funds out in that bridging period without paying tax (due to spare Personal Allowance) it's far better value.

£2,000 into your ISA is £2,000 income in the bridging period.

£2,000 into a SIPP or personal pension is £2,500 in the bridging period.  With no tax to pay.

Seems a no brainer if you haven't used all your annual (pension) allowance.

I have had a look at these, and there are some risks involved, plus all I could see was the mention of 'charges' 'fees' plus potentially having to pay a financial advisor on top etc etc.
Is there a simple guide to SIPP's somewhere, that can enable you to take out a SIPP without lining the pocket of a financial advisor 😊. If they are anything like personal pensions then I will stay clear, the level of customer service my wife is receiving from her personal pension providers is to be generous 0/10, that's once you can actually get through and speak to someone, they are making it so difficult for her to access her pensions, and saying that she needs to go through a financial advisor etc, and they are quoting ridiculous figures to deal with her pensions.

german_keeper

God knows what they are going to do with me with regards McLeod. In 2015 I went into Partnership rather than Alpha. I worked out that full drawdown of Partnership between 60 and 67 would give me about double p.a. than Alpha with 7 years AR applied. I was a bit wary of getting into investments but just went for a low risk lifestyle fund. If living to average life expectancy Alpha would have paid far more over the whole period but with a large difference in income pre and post SPA. Much lower contribution with Partnership too, which was handy at the time after 5 years of pay cuts, mortgage to pay and 3 kids still in education.

In those days the rules were a bit daft. You could only switch in April or October and couldn't switch from Classic to Partnership so I had to switch to Alpha in April 15 and then Partnership in October. I am pretty sure that was illegal too and it was changed shortly afterwards.

So from April 2015 to when I retired in August this year I have 6 months in Alpha and a DC pot with Legal and General. I took my Classic in 2019 when I went partially retired. I am still happy with my decision to join Partnership but the bottom line is if they hadn't broken the law I would have stayed in Classic until retirement. I know that because at the time I didn't even know Partnership existed; it was only the link to SPA with Alpha that caused me to investigate my options. I'm not going to get my knickers in a twist over anything but it will be interesting to see what happens next October.

kassy64

german_keeper said:

God knows what they are going to do with me with regards McLeod. In 2015 I went into Partnership rather than Alpha. I worked out that full drawdown of Partnership between 60 and 67 would give me about double p.a. than Alpha with 7 years AR applied. I was a bit wary of getting into investments but just went for a low risk lifestyle fund. If living to average life expectancy Alpha would have paid far more over the whole period but with a large difference in income pre and post SPA. Much lower contribution with Partnership too, which was handy at the time after 5 years of pay cuts, mortgage to pay and 3 kids still in education.

In those days the rules were a bit daft. You could only switch in April or October and couldn't switch from Classic to Partnership so I had to switch to Alpha in April 15 and then Partnership in October. I am pretty sure that was illegal too and it was changed shortly afterwards.

So from April 2015 to when I retired in August this year I have 6 months in Alpha and a DC pot with Legal and General. I took my Classic in 2019 when I went partially retired. I am still happy with my decision to join Partnership but the bottom line is if they hadn't broken the law I would have stayed in Classic until retirement. I know that because at the time I didn't even know Partnership existed; it was only the link to SPA with Alpha that caused me to investigate my options. I'm not going to get my knickers in a twist over anything but it will be interesting to see what happens next October.

Sorry I can't help you as have had no dealings with Partnership. Hopefully there will be someone along who does.
Can you send a message or email to CSP and ask the question, how they will deal with your case. Don't expect an immediate response but you may get something eventually.