CS Alpha - Calculating Annual Pension input from ABS

michaels

So it should be easy, I joined the civil service in May 22 and have finally got my first annual benefits statement covering 22/23

This has various lines
Standard pension (with EPA)
Added pension
Transferred in pension

Each has an initial number and a number with the Sept 22 inflation uplift applied.

Is my annual input amount simply 16x the sum of the inflation uplifted standard and added pension amounts?

Do I need to do some sort of accrual for the 1-5th April 2023?

Thanks

NedS

Correct, your ABS should say that it is a statement of your benefits until 31st March 2023, so my understanding is you need to make allowance for the period 1-5th April 2023 in your calculations.

So calculate your salary for 5 days (luckily your rate of pay probably hasn't changed as you likely didn't get a pay rise awarded on 1st April) and work out how much DB pension you would have accrued at 2.32% and add that on (with no uplift) to the amount before multiplying by 16.

Universidad

NedS said:

your rate of pay probably hasn't changed as you likely didn't get a pay rise awarded on 1st April

Oh, interesting side question - what happens to pensionable pay rises that are backdated to April?

michaels

NedS said:

Correct, your ABS should say that it is a statement of your benefits until 31st March 2023, so my understanding is you need to make allowance for the period 1-5th April 2023 in your calculations.

So calculate your salary for 5 days (luckily your rate of pay probably hasn't changed as you likely didn't get a pay rise awarded on 1st April) and work out how much DB pension you would have accrued at 2.32% and add that on (with no uplift) to the amount before multiplying by 16.

Thanks

1 and 2 April were weekend - should it be 5 days out of 365 or 3 out of 260 for the calc?

Also doing more added pension this year so should presumably also pro-rata this the 1-5th?

Pay rises only seem to happen in August for us and the huge 3.5% this year is going to make all the difference given where we are with inflation....

amanda1024

Universidad said:

NedS said:

your rate of pay probably hasn't changed as you likely didn't get a pay rise awarded on 1st April

Oh, interesting side question - what happens to pensionable pay rises that are backdated to April?

I think in general they're not backdated for pension contribution purposes (so if you get a big backdated figure in one month it can push you over the threshold for that month) - so I'd assumed it was the same for accruing benefits 

hugheskevi

amanda1024 said:

Universidad said:

NedS said:

your rate of pay probably hasn't changed as you likely didn't get a pay rise awarded on 1st April

Oh, interesting side question - what happens to pensionable pay rises that are backdated to April?

I think in general they're not backdated for pension contribution purposes (so if you get a big backdated figure in one month it can push you over the threshold for that month) - so I'd assumed it was the same for accruing benefits 

In final salary schemes the backdated pay counts when it was due.

In career average schemes the backdated pay counts when paid.

For contributions, backdated pay is ignored when calculating contribution threshold.

NedS

michaels said:

NedS said:

Correct, your ABS should say that it is a statement of your benefits until 31st March 2023, so my understanding is you need to make allowance for the period 1-5th April 2023 in your calculations.

So calculate your salary for 5 days (luckily your rate of pay probably hasn't changed as you likely didn't get a pay rise awarded on 1st April) and work out how much DB pension you would have accrued at 2.32% and add that on (with no uplift) to the amount before multiplying by 16.

Thanks

1 and 2 April were weekend - should it be 5 days out of 365 or 3 out of 260 for the calc?

You are paid monthly. There are 30 days in the month. So I would do Salary/12 * 5/30

I think the important thing here is that, if asked, you can show HMRC your workings, and if they are reasonable I doubt any small differences in calculating 5 days of conts will matter.

hugheskevi

NedS said:

michaels said:

NedS said:

Correct, your ABS should say that it is a statement of your benefits until 31st March 2023, so my understanding is you need to make allowance for the period 1-5th April 2023 in your calculations.

So calculate your salary for 5 days (luckily your rate of pay probably hasn't changed as you likely didn't get a pay rise awarded on 1st April) and work out how much DB pension you would have accrued at 2.32% and add that on (with no uplift) to the amount before multiplying by 16.

Thanks

1 and 2 April were weekend - should it be 5 days out of 365 or 3 out of 260 for the calc?

You are paid monthly. There are 30 days in the month. So I would do Salary/12 * 5/30

I think the important thing here is that, if asked, you can show HMRC your workings, and if they are reasonable I doubt any small differences in calculating 5 days of conts will matter.

HMRC won't care less about an individual's calculations of their pension input within a scheme. They will take the pension input from the scheme, as shown on the Pension Saving Statement.

The scheme will calculate the pension input based on what is received from the payroll regarding pensionable earnings between 1-5 April.

There is no standardised way to calculate the part month calculation, so each payroll will use a slightly different method. Unless you ask the specific payroll how they calculate earnings over the period (eg actual earnings on those days, pro-rata, etc) you will not be able to precisely replicate their calculations.

But the differences between approaches given the tiny proportion of the year should be insignificant.

amanda1024

hugheskevi said:

For contributions, backdated pay is ignored when calculating contribution threshold.

That's not what this page says: https://www.civilservicepensionscheme.org.uk/employers/employer-pension-notices/epn534-employee-contribution-rates-and-backdated-salary-policy/ - and this isn't the experience of colleagues this has impacted either.

hugheskevi

amanda1024 said:

hugheskevi said:

For contributions, backdated pay is ignored when calculating contribution threshold.

That's not what this page says: https://www.civilservicepensionscheme.org.uk/employers/employer-pension-notices/epn534-employee-contribution-rates-and-backdated-salary-policy/ - and this isn't the experience of colleagues this has impacted either.

That link is from 2018. The policy changed from 1 September 2020 - see this link which states:

Prior to 01 September 2020, backdated pay was added to regular monthly salary to determine which contribution band a member fell within. The contribution rates applied were determined each month, based on a pro-rata of the annual threshold.

For payments made after 01 September 2020, backdated pay should not be included when determining contribution tiers. This will be achieved by basing the pensionable earnings, used to determine the contribution tier only, on actual basic pay and any pensionable allowances. For avoidance of doubt, part-time workers continue to have their salary threshold worked out using their actual pay, and not their full-time equivalent salary. Note, backdated pay includes (but is not limited to) pay awards, allowances, etc.

This contribution rate should be applied against all pensionable earnings paid in the period. For example, both salary, and any backdated pay.