Civil Service Pension - Classic - leave or draw?

Wilks1409

Hi 

I would like some help with my pension please.  I am 60 and recently secured a new post in the NHS after working in the civil service for 26 years.  I plan to work for a few more years. I finished paying into Classic last year.  I do not need to draw my classic pension as I am working but my question is simple - why wouldn't I?  It is based on final salary and I have stopped paying into it. The pension is index linked but does not increase in any other way to account for non withdrawal.  I will be paying 40% tax on it but that still leaves me with 60%. I know the 2015 Remedy is still to be resolved but I can't think of a good reason not to claim the money now but maybe I'm missing something.  Thanks

Andy_L

If you've secured a payrise by going to the NHS than transferring it rather than taking it may be worthwhile. As the schemes are both part of the public sector transfer club they will ignore any increase in salary when calculating the transfer

Wilks1409

Thanks very much. Yes, I did secure a pay rise.  I assumed if I transferred over my classic and alpha I would lose the final salary bit.  I will get quotes from civil service and NHS I think. Really useful - thanks

Bimbly

Check out retirement ages for the two schemes. You may want to think twice if you have to wait longer for the pension to pay out. I believe the NHS one aligns with state retirement age.

Another thing you can do is take the civil service pension while paying extra into a separate pension to get the tax breaks. The NHS offers ways to buy extra pension (they are quite complicated, you can read about them on their website), or you can open a SIPP.

Dazed_and_C0nfused

Bimbly said:

Check out retirement ages for the two schemes. You may want to think twice if you have to wait longer for the pension to pay out. I believe the NHS one aligns with state retirement age.

Another thing you can do is take the civil service pension while paying extra into a separate pension to get the tax breaks. The NHS offers ways to buy extra pension (they are quite complicated, you can read about them on their website), or you can open a SIPP.

Good point, wouldn't this effectively change the normal pension age of the Classic pension from 60 to 67 😳

hyubh

Wilks1409 said:

Thanks very much. Yes, I did secure a pay rise.  I assumed if I transferred over my classic and alpha I would lose the final salary bit.  I will get quotes from civil service and NHS I think. 

Assuming the gap between leaving the civil service and joining the NHS is less than 5 years, a Club transfer like that would involve purchasing a final salary scheme credit in the new scheme that reflects its last final salary form - so the 2008 scheme in the NHS case. That's NPA 65. Since the old scheme benefits, being Classic, are NPA 60, I would expect the recknonable service credit in NHS 2008 to be greater than the reckonable service in Classic (since that's how Club final salary transfers work).