Civil Service pension - Classic & Alpha

Dazed_and_C0nfused

george_jetson said:

Dazed_and_C0nfused said:

westv said:

Golactico said:

The McCloud judgement is in and the remedy already established.

Basically, the affected period is the 7 years from April 2015 to April 2022.  When you take your Classic pension, you will have the option as to whether these 7 years are treated as additional years for your Classic pension, or they remain as they currently are, within the Alpha scheme. Calculations will be provided at the time you need to decide as to merits of taking either option. For me, I've done some sums and I already know that I'm best off leaving those 7 years in Alpha. This is usyouually the case for those whose service has been in the lower CS grades (AO/EO).

Any service from April 2022 onwards, will be Alpha for everyone. 

Are  basing your figures on taking Alpha at 60 or waiting until SPA? I'm just curious.

I think for plenty of people taking Alpha at 60 will be better than Classic.

Classic was 1/80ths with Alpha being nearly double that at 1/43rd.

Although for some the lump sum or promotion may be a factor that swings things towards Classic.

But taking Alpha at 60 will be actuarially reduced. 

I’ve had a play with the calculator and for me it’s finely balanced to say the least. 

I’ll wait until the “official” figures later this year. 

But the decision would be far easier if I knew for certain how long I’ll be drawing my pension for…!

But could the April 2023 inflation increase sway things more to Alpha.  The accrued benefits will get a sudden 10.1% jump!

Golactico

westv said:

Golactico said:

The McCloud judgement is in and the remedy already established.

Basically, the affected period is the 7 years from April 2015 to April 2022.  When you take your Classic pension, you will have the option as to whether these 7 years are treated as additional years for your Classic pension, or they remain as they currently are, within the Alpha scheme. Calculations will be provided at the time you need to decide as to merits of taking either option. For me, I've done some sums and I already know that I'm best off leaving those 7 years in Alpha. This is usyouually the case for those whose service has been in the lower CS grades (AO/EO).

Any service from April 2022 onwards, will be Alpha for everyone. 

Are  basing your figures on taking Alpha at 60 or waiting until SPA? I'm just curious.

My calcs are based on taking Alpha benefits at age 67. I did a 20year projection of total benefits received and keeping those 7 years as Alpha was the clear winner.

george_jetson

Dazed_and_C0nfused said:

george_jetson said:

Dazed_and_C0nfused said:

westv said:

Golactico said:

The McCloud judgement is in and the remedy already established.

Basically, the affected period is the 7 years from April 2015 to April 2022.  When you take your Classic pension, you will have the option as to whether these 7 years are treated as additional years for your Classic pension, or they remain as they currently are, within the Alpha scheme. Calculations will be provided at the time you need to decide as to merits of taking either option. For me, I've done some sums and I already know that I'm best off leaving those 7 years in Alpha. This is usyouually the case for those whose service has been in the lower CS grades (AO/EO).

Any service from April 2022 onwards, will be Alpha for everyone. 

Are  basing your figures on taking Alpha at 60 or waiting until SPA? I'm just curious.

I think for plenty of people taking Alpha at 60 will be better than Classic.

Classic was 1/80ths with Alpha being nearly double that at 1/43rd.

Although for some the lump sum or promotion may be a factor that swings things towards Classic.

But taking Alpha at 60 will be actuarially reduced. 

I’ve had a play with the calculator and for me it’s finely balanced to say the least. 

I’ll wait until the “official” figures later this year. 

But the decision would be far easier if I knew for certain how long I’ll be drawing my pension for…!

But could the April 2023 inflation increase sway things more to Alpha.  The accrued benefits will get a sudden 10.1% jump!

Yes never thought of that. 

Need to make a decision on more lump sum vs monthly pension at some point. 

On the basis of the link posted earlier it really is six of one, half a dozen of the other for me. 

I just hope the “official figures” out in autumn will make the decision more clear cut. Let’s see…

hugheskevi

I just hope the “official figures” out in autumn will make the decision more clear cut. Let’s see…

Schemes have 18 months from 1 October 2023 to issue statements to pensioner members, so don't hold your breath. It may well be only newly retiring members who get given figures in autumn.

Although for some the lump sum or promotion may be a factor that swings things towards Classic.

The impact of promotion is often given undue significance. Members in classic will have had 13+ years (2002-2015) in classic before moving to alpha, and all that remains linked to final salary and so benefits from any promotion. So to swing the equation in favour of classic would take a surprisingly high amount of pay escalation, although it of course depends exactly when the hypothetical promotion occurs, but it does demonstrate how good alpha is for older members, ie that alpha remains more than competitive even in comparisons involving promotion.

george_jetson

If I go with classic for the ‘15-‘21 period I get a larger lump sum but smaller monthly pension at 60.

Is there a “rule of thumb” for what would be an acceptable break even point ie the number of years it takes for the increased Alpha pension to match the increased lump sum?

i appreciate it’s an individual decision but wondered if there was a financially “correct” number as a starting point?

Dizee123

I will be putting a pension claim in soon to get my pension started on my 60th birthday in July.
I left the pension scheme on 31 Jul 2021 with approximately 37 years service in classic and 2 years in Alpha and my deferred pension statement gives a breakdown for the classic and Alpha amounts. 
It is my understanding that I will get a pension based on my deferred pension statement uplifted for inflation.  This amount will then be changed when all the legislation for the remedy goes through and I will be given a choice of the two schemes for the remedy period.  Could someone please confirm if this is correct.
Taking a lump sum is important to my as genetics suggest that I won't be one of these people who live into their late 90s with all their faculties and I want to enjoy my best years without worrying about money.  When the state pension kicks in, I will have sufficient anyway!

I have just had a play around with the calculator and when I equalise the lump sums there is very little in it for me between alpha and classic.

I wish it wasn't so complicated and that it could all have been sorted before I retire

hugheskevi

It is my understanding that I will get a pension based on my deferred pension statement uplifted for inflation.  This amount will then be changed when all the legislation for the remedy goes through and I will be given a choice of the two schemes for the remedy period.  Could someone please confirm if this is correct.

Yes - noting that keeping the pension you have at that point will not be an option, it will just be classic for all post 2015 service or alpha for all post 2015 service.

Taking a lump sum is important to my as genetics suggest that I won't be one of these people who live into their late 90s with all their faculties and I want to enjoy my best years without worrying about money.  When the state pension kicks in, I will have sufficient anyway!

The commutation rate of pension into lump sum is so poor that most who commence pension at age 60 and then live to mid 70s will gain from taking a higher alpha pension rather than a higher lump sum, from a purely financial perspective.

I have just had a play around with the calculator and when I equalise the lump sums there is very little in it for me between alpha and classic.

A common outcome.

I wish it wasn't so complicated and that it could all have been sorted before I retire

You could delay starting your pension until 1 October 2023, then it would be all sorted out before you take the pension. You would get arrears of classic pension back to age 60 so there would only be a small timing difference between taking it in July and in October. If instead you choose alpha pension for the post 2015 period, the alpha pension would get a lower actuarial reduction due to being commenced a few months later.

Dizee123

Hugheskevi, thank you very much for your explanations - very helpful as always.

You are absolutely correct about the commutation rate and have just reminded me to only take the 3 x Classic lump sum, and not commute any of the Classic pension further.

I will definitely have a think about delaying taking it until Oct 23, that is an option I hadn't thought of.  I think I need to spend a little effort doing some forward projections for all options