Civil service premium pension

Robotoron

I'm doing some forward planning looking into my pension prediction. I've recently checked my ABS for my civil service pensions and the premium calculation seems to be incorrect. Can anyone help me with the following questions?

The premium pension value is based on: 
(1) Pensionable earnings in last 12 months

(2) Best inflation-adjusted pensionable earnings from the last 4 complete scheme years (1 Apr - 31 Mar)

(3) Your highest average pensionable earnings in any period of three complete scheme years during the last 13 years ending on your last day of service

My questions are: 
A. For (2) is "the last 4 complete scheme years" the four complete years leading up to the last date of premium, on 31/3/22, or is it the last 4 years of employment in the civil service (so if I work until 2040 it will be the complete financial years 2035/36-2039/40)?
B. What is the source (link appreciated if poss) of the figure that is used to revalue the pension in line with inflation over the last 13 years?
C. I've worked part time for the last 4 years. Are "pensionable earnings" for the calculation of (1) and (2) my actual part-time gross salary or the full time equivalent?

As my career trajectory is a little non standard (dropped a grade a few years ago) and I do not intend to earn as highly as I was doing several years ago again I suspect it might make sense to leave the civil service to preserve the premium pension value. My approximate salaries have been: 

2024 - 40k (part-time)
2023 - 40k (part-time)
2022 - 48k (part-time)
2021 - 47k (part-time)
2020 - 46k (part-time)
2019 - 67k (full-time)
2018 - 66k
2017 - 65k
2016 - 64k
2015 - 63k
2014 - 62k
2013- 61k
2012 -60k
2011- 50k

hugheskevi

Robotoron said:

I've recently checked my ABS for my civil service pensions and the premium calculation seems to be incorrect.

It should be based on your salary as at 31st March 2024, is it something different to that?

A. For (2) is "the last 4 complete scheme years" the four complete years leading up to the last date of premium, on 31/3/22, or is it the last 4 years of employment in the civil service (so if I work until 2040 it will be the complete financial years 2035/36-2039/40)?

Last 4 years of employment.

B. What is the source (link appreciated if poss) of the figure that is used to revalue the pension in line with inflation over the last 13 years?

Past annual increases are at this link. Note that the last complete scheme year is not revalued, then the year before that is revalued by the most recent increase, and so on.

C. I've worked part time for the last 4 years. Are "pensionable earnings" for the calculation of (1) and (2) my actual part-time gross salary or the full time equivalent?

Full time equivalent

As my career trajectory is a little non standard (dropped a grade a few years ago) and I do not intend to earn as highly as I was doing several years ago again I suspect it might make sense to leave the civil service to preserve the premium pension value. My approximate salaries have been: 

Switching to the Partnership scheme would create a deferred Premium award, ie, locking in the final pensionable earnings figure applicable as at the date of the deferred award creation and uprated by CPI thereafter. If you were to do that, you would switch from 1 March to avoid having a complete scheme year just before the best figures start to drop out of the look-back.

Robotoron

Thanks @hugheskevi for your quick and clear reply that answers all my questions.

Yes, the ABS estimate is based on my current 40k salary, and it's about half what I'd expect it to me based on the early/mid 2010s figures adjusted for inflation that would give me an approximately 80k salary.

Whilst I need to work out precisely (and get my spreadsheets out) the inflation adjusted figures I'm also glad I checked this now as, if 2012-2014 are my best years, I'll need to make a decision whether to leave or switch to partnership in the next few months.

Robotoron

Has anyone had any luck getting myCSP to generate three quotes based on the three different ways to calculate the premium pension?

german_keeper

Robotoron said:

Has anyone had any luck getting myCSP to generate three quotes based on the three different ways to calculate the premium pension?

To be honest unfortunately I would be amazed if they did. I know a few people who have asked for some sort of forecast and all MyCSP have done is pointed them to the calculators on the website. Mind you I don't think there is a calculator to help with this so you never know, you might get lucky. Doubt it though.

pinnks

The only difference in pension terms is your final pensionable earnings and you can cobble a spreadsheet together to calculate those.  Just be aware of the points @hugheskevi makes about which year's CPI to use. If you read the scheme rules you should be able to figure it out.
  

hugheskevi

Here are the inflation adjustments for each year.


MyCSP should provide the figures for the 3 measures of final pensionable earnings as they are a matter of fact, not a forecast and a member has a legitimate reason to request them given they are essential for an accurate pension calculation. However whether they would is another matter - the biggest problem would be getting past them treating it as a request for a forecast rather than for existing values.

SimonSeys

Thanks @hugheskevi.  I’m thinking about when to pull the trigger and retire.

Given the 10.1% inflation in 2023/24 as per your earlier link, am I right in thinking that if I retired on Sat April 2026 my salary would be uplifted by 10.1% plus  6.7% plus unknown plus unknown?

(to be clear, my salary has gone up by less than inflation so I. Keen to keep the 10.1% in,)

hugheskevi

If leaving in April 2026, the best of the last 4 complete scheme years would be 2025/26, 2024/25, 2023/24 and 2022/23.

The pensionable earnings would be adjusted by:

2025/26 - not adjusted
2024/25 - adjusted by September 2025 CPI (unknown)
2023/24 - adjusted by September 2025 and 2024 CPI (so unknown and c2%) 
2022/23 - adjusted by September 2025, 2024 and 2023 CPI (unknown, c2% and 6.7%)

So to keep the 10.1% September 2022 CPI in the equation for best of last 4 years you would need to leave the scheme before the end of March 2026.

Although 10.1% would still be in the best 3 consecutive years of last 13, so you should calculate all measures to see which is best.

SimonSeys

Thanks @hugheskevi - very clear.  

Sorry two very quick questions:  Firstly am I right in thinking the average of three years in the last 13 is calculated in the same way regarding inflation. 

Secondly, what’s the figure stated as pensionable earnings in my ABS, am I right in thinking that someone has done the best of four / average of three in 13 for me, and that’s the figure in the ABS?

hugheskevi

SimonSeys said:

am I right in thinking the average of three years in the last 13 is calculated in the same way regarding inflation. 

Yes, start with actual pensionable earnings for each year, apply the relevant inflation adjustment to each year's pensionable earnings, then average each 3-year period.

The highest figure from each of the 3-year periods within the last 13 is the highest inflation-adjusted pensionable earnings for that leg of the calculation (the other legs being pensionable earnings in the last 12 months, and best inflation-adjusted earnings from the last 4 complete scheme years).

SimonSeys said:

Secondly, what’s the figure stated as pensionable earnings in my ABS, am I right in thinking that someone has done the best of four / average of three in 13 for me, and that’s the figure in the ABS?

Nope. The ABS takes the extremely simplistic approach of just using whatever your pensionable earnings on 31st March are. These are used along with years of service to calculate pension entitlement. So the salary figure used to calculate ABS benefits reflects none of the 3 measures of final pensionable earnings under the scheme rules.

You will not find any of the inflation-adjusted figures or best final pensionable earnings anywhere in ABS or online portal. Prior to 2015, ABS used the best final pensionable earnings figure as calculated under scheme rules using the best of the 3 legs, but for almost 10 years the simplified approach has been used.