Questions about Civil Service Pension

Sapindus

I'm 53, divorced (two more or less grown up kids) and a bit confused.  I have a civil service pension which I've been paying into for 24 years.  Always been part-time, first ten years or so 0.6 and then 0.8 up to now.

In recent years I've been focussed on paying off my mortgage, to the point where later this year I'm planning on moving to an area with slightly lower house prices and could thus become mortgage free. So I started to pick up vibes that I should be (belatedly) thinking about my pension.

I went on the Age UK pension tool which told me people in my wage bracket like to have 60% of their salary in retirement.  And that's where I got confused.  It started asking questions about how big my "pension pot" is.  My CSP statement doesn't tell me that.  The tool asked me about contributions, I can figure that out from my wage slip, but also about defined benefit pension income, and CSP doesn't use those words so I don't know how much that is either.

CSP does however have a "retirement modeller" which estimates that if I retire at 67 I'll get a figure that roughly equates to 69% of my current salary.  So do I put some measure of trust in it?  Because it seems to be working off the full-time equivalent for my salary.  Can that be right?

I had a colleague who was still working in her seventies and burst into tears if anyone ever mentioned retirement because "they've messed up my pension and I can't afford to retire" so I'm a  bit nervous...  Should I forget about being mortgage free and put the money I save by moving down-market into a private pension?

Dazed_and_C0nfused

Sapindus said:

I'm 53, divorced (two more or less grown up kids) and a bit confused.  I have a civil service pension which I've been paying into for 24 years.  Always been part-time, first ten years or so 0.6 and then 0.8 up to now.

In recent years I've been focussed on paying off my mortgage, to the point where later this year I'm planning on moving to an area with slightly lower house prices and could thus become mortgage free. So I started to pick up vibes that I should be (belatedly) thinking about my pension.

I went on the Age UK pension tool which told me people in my wage bracket like to have 60% of their salary in retirement.  And that's where I got confused.  It started asking questions about how big my "pension pot" is.  My CSP statement doesn't tell me that.  The tool asked me about contributions, I can figure that out from my wage slip, but also about defined benefit pension income, and CSP doesn't use those words so I don't know how much that is either.

CSP does however have a "retirement modeller" which estimates that if I retire at 67 I'll get a figure that roughly equates to 69% of my current salary.  So do I put some measure of trust in it?  Because it seems to be working off the full-time equivalent for my salary.  Can that be right?

I had a colleague who was still working in her seventies and burst into tears if anyone ever mentioned retirement because "they've messed up my pension and I can't afford to retire" so I'm a  bit nervous...  Should I forget about being mortgage free and put the money I save by moving down-market into a private pension?

You don't have a pension pot.

With the civil service pension you get a pension according to the scheme rules.

For some of your service that is going to be based on your final salary.

And in more recent years you will build up a pension year by year which is worth 2.32% of your (actual) annual salary.  

The final salary section is based on your full time equivalent salary.  But each of your years only counts 0.6 or 0.8 of a year.

Say your first five years were 0.6 then at the end of that period you would have 3.0 years service for pension purposes.

In more recent years you simply take your actual (part time) salary and multiply that by 2.32% to see what you will earn in pension each year.

So say for example your part time salary is £24,000.  Each year you will earn £556.80 in pension.  And that is devalued each year to allow for inflation.

I wouldn't bother using any modeller at this stage, you should find your annual pension statement as that is likely to be the most accurate information you have.

amanda1024

For future reference, your civil service pension almost certainly is a defined benefit pension. CSP do use those words.

hyubh

Sapindus said:

I'm 53, divorced (two more or less grown up kids) and a bit confused.  I have a civil service pension which I've been paying into for 24 years.  Always been part-time, first ten years or so 0.6 and then 0.8 up to now.

In recent years I've been focussed on paying off my mortgage, to the point where later this year I'm planning on moving to an area with slightly lower house prices and could thus become mortgage free. So I started to pick up vibes that I should be (belatedly) thinking about my pension.

I went on the Age UK pension tool which told me people in my wage bracket like to have 60% of their salary in retirement.  And that's where I got confused.  It started asking questions about how big my "pension pot" is.  My CSP statement doesn't tell me that.  The tool asked me about contributions, I can figure that out from my wage slip, but also about defined benefit pension income, and CSP doesn't use those words so I don't know how much that is either.

I'd ignore the generic Age UK tool, which as D&C says, is speaking in DC terms that are irrelevant to you, and think more in terms of the civil service pension itself. For example, with potentially two decades of (I assume) Classic membership, you might more be thinking of retiring at 60, or investigating a flexible retirement at that age.

CSP does however have a "retirement modeller" which estimates that if I retire at 67 I'll get a figure that roughly equates to 69% of my current salary.  So do I put some measure of trust in it?  Because it seems to be working off the full-time equivalent for my salary.  Can that be right?

Your Classic benefits are based on your full-time equivalent salary, with your part time working being taken account of in the 'reckonable service' calculation (i.e. your reckonable service will be less than your calendar service). This is to ensure fairness if person A works part time for 10 years then full time for the last 10 vs. person B who does the opposite but at the same rates of pay. 

I had a colleague who was still working in her seventies and burst into tears if anyone ever mentioned retirement because "they've messed up my pension and I can't afford to retire" so I'm a  bit nervous...

I certainly wouldn't generalise that, you've got defined benefits at 60 and SPA. Hassles with the scheme administrator can't cancel those out.

Sapindus

amanda1024 said:

For future reference, your civil service pension almost certainly is a defined benefit pension. CSP do use those words.

Dazed_and_C0nfused said:

I wouldn't bother using any modeller at this stage, you should find your annual pension statement as that is likely to be the most accurate information you have.

OK, I think I get this now.  The figures on my annual benefit statement are what I would get if I stopped working now and then claimed my pension at 67 or whatever it is.  So this is the figure the AgeUK calculator means by defined benefit pension income.  And then it works out by asking for my and my employer's contributions how much will be added between now and retirement.  And in fact the AgeUK tool comes out with a roughly similar figure to what the CSP modeller does.

So in summary, I don't think I need to panic. Thanks for the help everyone.

Dazed_and_C0nfused

Sapindus said:

amanda1024 said:

For future reference, your civil service pension almost certainly is a defined benefit pension. CSP do use those words.

Dazed_and_C0nfused said:

I wouldn't bother using any modeller at this stage, you should find your annual pension statement as that is likely to be the most accurate information you have.

OK, I think I get this now.  The figures on my annual benefit statement are what I would get if I stopped working now and then claimed my pension at 67 or whatever it is.  So this is the figure the AgeUK calculator means by defined benefit pension income.  And then it works out by asking for my and my employer's contributions how much will be added between now and retirement.  And in fact the AgeUK tool comes out with a roughly similar figure to what the CSP modeller does.

So in summary, I don't think I need to panic. Thanks for the help everyone.

Your contributions (and the employer contributions) are of absolutely no relevance whatsoever.

They aren't being added anywhere as you don't have a pension pot.

You are basically buying some delayed salary, payable for life from when you reach the scheme normal pension age.  With good inflation protection.

bluenose1

Check your scheme rules, I can take my civil service pension without reduction from age 60, though I joined in 1984, so probably different rules.
My sister took her civil service pension several years  before her retirement date as you can claim it early with an actuarial deduction. Not what most people would do but it has meant she has a good standard of living now and can afford not to worry about money. 

Remember when you retire you won’t be paying Natural Insurance so your net income will be higher than the 69% you mention earlier.

Worth exploring the options based on when you would like to retire.

Yorkie1

Sapindus said:

amanda1024 said:

For future reference, your civil service pension almost certainly is a defined benefit pension. CSP do use those words.

Dazed_and_C0nfused said:

I wouldn't bother using any modeller at this stage, you should find your annual pension statement as that is likely to be the most accurate information you have.

OK, I think I get this now.  The figures on my annual benefit statement are what I would get if I stopped working now and then claimed my pension at 67 or whatever it is.  So this is the figure the AgeUK calculator means by defined benefit pension income.  And then it works out by asking for my and my employer's contributions how much will be added between now and retirement.  And in fact the AgeUK tool comes out with a roughly similar figure to what the CSP modeller does.

So in summary, I don't think I need to panic. Thanks for the help everyone.

Obviously, I agree with the far more experienced posters' comments; just to add a little bit.

As you have been working in the CS for the last 24 years, that's since 2000.

You therefore have two sets of pension: Alpha (which you can take without reduction at state pension age), and for earlier service you would be in the relevant final salary scheme e.g. Classic. You can take the final salary part of your pension at a younger age than state pension age (e.g., Classic's normal pension age is 60).

So, if you want, you can take your pension in two parts: all of the Classic, and then all of the Alpha. You don't have to delay taking the Classic part until you are eligible for the Alpha part.