Please help me understand PCSPS / Alpha Ill Health Pension Options (Civil Service)

kassy64

Dazed_and_C0nfused said:

Are you absolutely certain about the PCSPS lump sum in option A?

Don't know much about the specifics of ill health retirement but a factor of over 28 looks extremely high for the civil service pension scheme.

She would be giving up £1,546 of pension for £44,107.  Commutation rate of 28.5.

Whereas the Alpha one of 12 (£150 given up for life, in return for one off £1,800) is typical of the civil service.

Agree, all the lump sum figures look suspect to me.

kassy64

hugheskevi said:

kassy64 said:

Someone with more knowledge than me will know but your sheet shows the PCSPS pension being offered without a lump sum in option A and B. My understanding is that this part of the pension has a standard lump sum of 3 x pensionable pay, however your sheet shows an option with pension only and no lump sum. Is this correct? Maybe its different for ill health retirement or very short service. When I retired I had to take the standard 3 x lump sum and had the option to increase it only, wasn't aware it could be reduced. Anyone have thoughts on that.

PCSPS includes the follow sections. Presumably the member is in Premium or Nuvos.

• Classic (automatic lump sum)
• Classic Plus (automatic lump sum)
• Premium (no automatic lump sum)
• Nuvos (no automatic lump sum)

That makes sense then. I was in Classic hence the automatic lump sum.

JillyC8

 

Here are screenshots of the actual letter. She's asked me to help her understand Option A compared to Option B. I will advise her to go back to check with them but want to help her understand it if I can. Not sure I've worked it out correctly.

Dazed_and_C0nfused

If you look at the first sheet again you will see the £8162 comes with a (tax free) PCLS of £24,488.

JillyC8

Sorry if they're out of order.

JillyC8

Dazed_and_C0nfused said:

If you look at the first sheet again you will see the £8162 comes with a (tax free) PCLS of £24,488.

In the text beneath though; it states a higher maximum amount of £44,+? She wants to explore the maximum lump sum she can take...

hugheskevi

So the member was in the Classic section of the PCSPS and therefore receives an automatic lump sum - that is the source of all your confusion as you are putting those options down as having no lump sum. Everything else looks right.

The automatic lump sum is £25,545 under Option A and £15,840 under Option B. In both cases, this lump sum could be increased by exchanging it for a reduced pension.

It appears the member was not married/Civil Partner, as a WPS refund is payable - but oddly only listed under Option A.

The statements pose 2 questions:

• Why is no WPS refund payable under PCSPS Option B?
• Why is the interest on the WPS refund under Option A so low?

I'd suggest putting these questions back to MyCSP.

hugheskevi

JillyC8 said:

Dazed_and_C0nfused said:

If you look at the first sheet again you will see the £8162 comes with a (tax free) PCLS of £24,488.

In the text beneath though; it states a higher maximum amount of £44,+? She wants to explore the maximum lump sum she can take...

Depending on what her ill-health is and if it has an impact on life expectancy or not, this may well be terrible decision as presumably she is relatively young.

Very careful consideration should be given about how much would be received through higher pension income compared to the lump sum - the pension income is very likely to be considerably better than the lump sum.

JillyC8

hugheskevi said:

JillyC8 said:

Dazed_and_C0nfused said:

If you look at the first sheet again you will see the £8162 comes with a (tax free) PCLS of £24,488.

In the text beneath though; it states a higher maximum amount of £44,+? She wants to explore the maximum lump sum she can take...

Depending on what her ill-health is and if it has an impact on life expectancy or not, this may well be terrible decision as presumably she is relatively young.

Very careful consideration should be given about how much would be received through higher pension income compared to the lump sum - the pension income is very likely to be considerably better than the lump sum.

She is 55 and doesn't have a life-threatening illness, more of a mild disability. She is working part-time elsewhere now.

m_c_s

She was in the Classic PCPS scheme. Then went into Alpha. The figures look ok to me.
You previously quoted minimum income and maximum lump sum conversion values which has thrown people off  a little. The added WPS (widows pension) refund also wasn't clear. Not sure why it is only included in one Option though?
These schemes are quite flexible but the key thing is your friend needs to decide what is best for her in terms of income and lump sum. If there is an immediate need for the lump sum then maximising that could be best for her but if not that could be a poor decision financially in the long term. She could take Option B but mix and match by taking the standard PCPS (classic) income and lump sum pension but then just the income from Alpha and no lump sum. This is probably the better option financially in normal circumstances.