Civil Service Premium Pension - take at 60 or wait till end of scheme year?

lemonfix

Hoping someone can help with what should be a fairly easy question, yet I can’t seem to settle on an answer. I reach 60 in September, so can take my Premium pension. I will get a pay rise in April, so I’m not sure whether to stay until 31 March 2025 when final salary will be highest, or go in September. I’m toying with partial retirement, and presumably the same dilemma applies. I think I’m stuck on that fact that any pension due between Sept and April just disappears.

And am I right in thinking that any abatement from partial retirement just disappears - and is not given back when fully retired? I’m finding hard to reconcile the fact that I have paid into a scheme for 40+ years but can’t receive full benefit if I keep working in CS, yet can if I work elsewhere.

hugheskevi

lemonfix said:

Hoping someone can help with what should be a fairly easy question, yet I can’t seem to settle on an answer. I reach 60 in September, so can take my Premium pension. I will get a pay rise in April, so I’m not sure whether to stay until 31 March 2025 when final salary will be highest, or go in September. I’m toying with partial retirement, and presumably the same dilemma applies. I think I’m stuck on that fact that any pension due between Sept and April just disappears.

And am I right in thinking that any abatement from partial retirement just disappears - and is not given back when fully retired? I’m finding hard to reconcile the fact that I have paid into a scheme for 40+ years but can’t receive full benefit if I keep working in CS, yet can if I work elsewhere.

Do you know what measure of final pensionable earnings gives the highest result? You receive the highest of:

• Last 12 months pensionable earnings
• Highest inflation-adjusted pensionable earnings from each of last 4 complete Scheme Years (1 Apr-31 Mar)
• Highest average pensionable earnings in any period of three complete scheme years during the last 13 years ending on your last day of service

And for completeness, you are certain you are a Premium member, ie, switched completely from Classic to Premium in 2002?

It may well be that your best earnings are calculated from the second or third measure, in which case the pay rise may have little or even no effect on the calculation.

Your understanding of abatement is correct.

lemonfix

Ah! Light shines - I’d completely forgotten previous years were adjusted for inflation - will have to work that out, especially given the 2022 11% high. Thanks for the quick response, very much appreciated. (Yes, moved from Classic to Premium when it was introduced.)

pinnks

Don't forget when working it out that that 10.1% CPI for Sept 2022 will be applied to the scheme year 1 April 2023 to 31 March 2024, and the same principle for the inflation adjustment for other years.

hugheskevi

pinnks said:

Don't forget when working it out that that 10.1% CPI for Sept 2022 will be applied to the scheme year 1 April 2023 to 31 March 2024, and the same principle for the inflation adjustment for other years.

I don't think the last complete scheme year is revalued, so once we reach 1 April 2024 and the 23/24 scheme year is complete, the revaluation would look like this:


Note that the last complete scheme year - 2023/24 - is not revalued. The highlighted boxes show what the various 3 tests of final pensionable earnings would result in, if the person retired on exactly 1 April 2024 (note the highlighted figures show a big decline in pensionable earnings the last few years which is very unusual, this was just something I had to hand, the numbers themselves don't matter, it is the calculation approach that is important). Note also the average of previous 3 years looks back over the last 13 complete scheme years - I haven't shown earlier years just to keep it managable to display. Annual income here is pensionable earnings in cash terms, the inflation adjustment is the September CPI figure used for uprating public service pensions in payment, compounded over time.

r6mile

lemonfix said:

Ah! Light shines - I’d completely forgotten previous years were adjusted for inflation - will have to work that out, especially given the 2022 11% high. Thanks for the quick response, very much appreciated. (Yes, moved from Classic to Premium when it was introduced.)

Probably an excellent decision! I wonder what proportion of Classic members switched over?

lemonfix

hugheskevi said:

pinnks said:

Don't forget when working it out that that 10.1% CPI for Sept 2022 will be applied to the scheme year 1 April 2023 to 31 March 2024, and the same principle for the inflation adjustment for other years.

I don't think the last complete scheme year is revalued, so once we reach 1 April 2024 and the 23/24 scheme year is complete, the revaluation would look like this:


Note that the last complete scheme year - 2023/24 - is not revalued. The highlighted boxes show what the various 3 tests of final pensionable earnings would result in, if the person retired on exactly 1 April 2024 (note the highlighted figures show a big decline in pensionable earnings the last few years which is very unusual, this was just something I had to hand, the numbers themselves don't matter, it is the calculation approach that is important). Note also the average of previous 3 years looks back over the last 13 complete scheme years - I haven't shown earlier years just to keep it managable to display. Annual income here is pensionable earnings in cash terms, the inflation adjustment is the September CPI figure used for uprating public service pensions in payment, compounded over time.

 I was hoping it would be simple - live and learn! 

One final question, if I may. Given I reach scheme pension age in September does salary after that form part of my final scheme year or does final year in my case finish 31 March this year? 

lemonfix

r6mile said:

lemonfix said:

Ah! Light shines - I’d completely forgotten previous years were adjusted for inflation - will have to work that out, especially given the 2022 11% high. Thanks for the quick response, very much appreciated. (Yes, moved from Classic to Premium when it was introduced.)

Probably an excellent decision! I wonder what proportion of Classic members switched over?

I’d imagine it depended on time served. I was just better off changing having 19yrs in, but the deciding factor for me, as I recall, lay in changes to death benefits and the fact that my other half and I didn’t have to be married. Next decision is, of course, around the McCloud judgement.

hugheskevi

Given I reach scheme pension age in September does salary after that form part of my final scheme year or does final year in my case finish 31 March this year? 

Final year will finish on 31 March as only complete scheme years count, assuming you then leave at some point after that date but before the following 31 March. Obviously salary after 31 March counts towards the salary in last 12 months measure.

Next decision is, of course, around the McCloud judgement.

It would be very surprising for alpha to be better than Premium, as long as Premium benefits are taken on or before age 60 (but not impossible).

pinnks

hugheskevi said:

pinnks said:

Don't forget when working it out that that 10.1% CPI for Sept 2022 will be applied to the scheme year 1 April 2023 to 31 March 2024, and the same principle for the inflation adjustment for other years.

I don't think the last complete scheme year is revalued, so once we reach 1 April 2024 and the 23/24 scheme year is complete, the revaluation would look like this:


Note that the last complete scheme year - 2023/24 - is not revalued. The highlighted boxes show what the various 3 tests of final pensionable earnings would result in, if the person retired on exactly 1 April 2024 (note the highlighted figures show a big decline in pensionable earnings the last few years which is very unusual, this was just something I had to hand, the numbers themselves don't matter, it is the calculation approach that is important). Note also the average of previous 3 years looks back over the last 13 complete scheme years - I haven't shown earlier years just to keep it managable to display. Annual income here is pensionable earnings in cash terms, the inflation adjustment is the September CPI figure used for uprating public service pensions in payment, compounded over time.

I agree that the last year is not revalued but was intending to show only that the CPI used to revalue a scheme year, is the CPI for September of the preceding year, not the September CPI of the year being revalued.  I got this wrong when I first created a spreadsheet to look at my pension. 

Kingswood12345

Hi - sorry to piggy back on this exchange, but I have a related question following an exchange with MyCSP.

I am planning to take early retirement in 2024-25. MyCSP has told me that under the 13 year rule mentioned above my best years are 2015-16 to 2017-18. I don't disagree but don't understand the factors they are using to revalue these years.   

For example, for 2016-17 pensionable earnings it looks like MyCSP are using CPI at Sept 2016 (which makes sense) and CPI at Sept 2022 (which doesn't make sense to me). As I will be partially retiring in 2024-25, I had expected 2016-17 pensionable earnings to be revalued to 2023-24 prices by MyCSP using CPI at Sept 2016 and Sept 2023 (not Sept 2022).  At a time of high inflation, missing a year of uplift has a material impact. 

Does anyone know if this is an error in my understanding of the scheme or MyCSP making an error. Many thanks.