Civil Service Premium Pension

Oscarhound

I can see that there are a number of very knowledgeable folk in this area, so hope someone can help provide me with some clarity 😄😧. I will be 64 when I retire, which means I have worked 4years beyond the schemes normal pension age (NPA) of 60. I have had a benefit calculation based on the leg 3 calculation, which now makes sense to me ( although this has resulted in 2 different Quotes which I will need to follow up). 

My question is about CPI increases to my pension for the 4 years I was eligible to claim the pension, but did not. These years will be from 31st March 2021 to 31st March 2025. Will these be paid once I am in receipt of my pension on 31st March 2025, or do I loose all of these increases which would have been added had I taken the pension at aged 60?

hugheskevi

Assuming you have remained in the premium and alpha pension schemes, then your Premium pension will be calculated as at your last date of service using the best of the 3 leg calculation.

The past CPI increases relate to revaluation and indexation for deferred and pensioner members. As you are an active member there are no past CPI increases, the value of your pension escalates by the increased value of the 3 leg calculation. However, due to the long period of look-back of one of the legs (13 years) combined with use of inflation adjusted past values, the calculation can often effectively act as giving a CPI underpin to the increase in pension amount due.

Oscarhound

Thanks hugheskevi, I wondered if that was what the multiplier was for. It’s just unfortunate that in the last 4 years CPI has increased by 3.1% in 2022 + 10.1% in 2023 and 6.7% in 2024 which effectively means that had I taken my pension at aged 60 (2021)  my pension would be worth £10,000 more than the valuation provided.  The only compensation is that I’ve enjoyed my extra 4 years, and I was earning almost twice what my pension would have been. Im trying to soften the blow.
PS I didn’t move to alpha, I decided to join the partnership scheme because I only intended to work 1 or 2 years beyond my 60 birthday i.e a year after the Premium scheme ended😄

thanks again, I knew you would have the answer.

SimonSeys

Can you not rejoin Alpha?  You can switch between partnership and alpha and back again only once in every 12 month period but I think if you do it will re-establish the link provided the gap is less than five years? I am not certain but @hugheskevi will know for sure. 

(Slightly selfish reason in checking in that I am 80% sure I will move to partnership soon, but want to have the option of going back if promoted)

hugheskevi

Oscarhound said:

Thanks hugheskevi, I wondered if that was what the multiplier was for. It’s just unfortunate that in the last 4 years CPI has increased by 3.1% in 2022 + 10.1% in 2023 and 6.7% in 2024 which effectively means that had I taken my pension at aged 60 (2021)  my pension would be worth £10,000 more than the valuation provided.  The only compensation is that I’ve enjoyed my extra 4 years, and I was earning almost twice what my pension would have been. Im trying to soften the blow.
PS I didn’t move to alpha, I decided to join the partnership scheme because I only intended to work 1 or 2 years beyond my 60 birthday i.e a year after the Premium scheme ended😄

So your Premium pension would have been calculated as at the date you switched to Partnership based on your best pensionable earnings as at that date, and then the pension has increased by CPI.

SimonSeys said:

Can you not rejoin Alpha?  You can switch between partnership and alpha and back again only once in every 12 month period but I think if you do it will re-establish the link provided the gap is less than five years? I am not certain but @hugheskevi will know for sure. 

That is correct. As long as a member rejoins alpha within 5 years of leaving the scheme the deferred award is cancelled. The position is therefore similar to having taken a period of unpaid leave where a member is active but not accruing pension.

Oscarhound

Hi both, I don’t think transferring back into alpha would be worth while,particularly because of poorer benefits for spouses or partners. 

I got a reply about the CPI increases once I retire and am in receipt of my pension. Thought it might be of use to future retirees who have worked beyond NPA and not taken part of their pension. It takes a bit of mental gymnastics to understand, and I added the , after ‘payment’ second line…….

Quote: Pensions in deferment do not increase beyond pension age, and the scheme age for premium is 60. Once the pension goes into payment, arrears of pension are payed and any cost of living increases due to you are applied at this time.

I thought Premium didn’t offer arrears of pension. Perhaps in this context arrears means the CPI increases you would have received. Any stabs at deciphering this one?

german_keeper

I think there have been suggestions before that a deferred pension pension receives arrears back to 60 but a current pension doesn't. Not sure if I have ever seen clear confirmation of this, any links to guidance, or whether it applies to all public sector pensions or just some of them. 

Certainly when I was working, for those of us who took an interest in our pension, we always believed that if you worked beyond 60 and didn't take partial retirement, you were working full time when you could earn more working part time; no NI to pay on pension payments. And as per previous para no arrears would be paid when you finally took your pension.

I also moved to Partnership in 2015 (looking forward to how they deal with the contingent decision in a few month's time, suspect it will be rather painful) and with regard to this particular issue I believe, if in partnership a legacy pension is deferred, if in Alpha you are deemed to still be a scheme member and your legacy pension is not deferred.

Don't take any of this as gospel, I will happily stand corrected on any of it. 

Oscarhound

Hi German_keeper. Thanks for responding. It does feel like black hole when it comes to CPI and deferred pensions. Also, what’s the difference between deferred and preserved. I’m used to researching, doing literature reviews etc. BUT this area seems to be the best kept secret😄
From your last paragraph am I right in assuming that I have a deferred legacy pension because I didn’t move to Alpha, and therefore may receive arrears back to 60? That was my initial thoughts when I read the response from MyCivil Service, quoted in previous post. However, I’m so confused with conflicting information and no way of confirming, that I guess I’ll prepare myself for the worst case scenario. 

When I get a definitive answer (31st April when my pension should be paid), I’ll make a post, so that others will know what to expect.
In the interim, if anyone out there already has the definitive answer, please join us and let us know😊

marky_b_2

I have a preserved Classic pension from 1991 to 2001 before I got privatised. 

I have it in writing from CSP that, I would get my pension arrears and any inflation increases backdated to my 60th birthday if I take it at a latter date.

marky_b_2

Just for context I rejoined the Civil Service in 2003

I explained to MyCSP that I was thinking of only taking my Premium pension by going partial retirement and I wouldn't be taken my deferred classic until i'm 62 as I think that's when I will be retiring.

I asked the specific question regarding the two years worth of pension in Classic from age 60-62

She said I would have all the money backdated until Age 60 with either inflation or CPI (i can't remember the exact one she said)  added each year until I retire.

I was told the lump sum would be based on my pension at aged 60 and that it would not rise with CPI/inflation between aged 60 and when I finally retire. 




I can supply my enquiry reference number if you are contacting MyCSP so that you can quote the advice I was giving. 

This is the email reply to my phone call regarding the above question

Date: 12 June 2023 Dear Mr C Thank you for your recent enquiry. Once in payment, your preserved classic pension will increase each April by inflation. If you choose to defer claiming this pension until after your normal retirement age (60), it would still attract the same annual inflation increases, which continue past this age. However, it is important to note that the lump sum only attracts increases up to age 60. If you defer claiming your preserved classic pension, it will be paid in arrears and backdated to your 60th birthday. The arrears payment will be calculated as if the pension had been claimed at 60, reflecting the correct inflation rates applicable. If you access your current pension through partial retirement, your combined salary and pension should ideally not be more than what you were earning before you partially retired (your 'salary of reference'). This is because, if your new part-time salary plus your pension exceed your pre-partial retirement salary, we deduct the excess from your pension. This is known as abatement. You can find more detail on this here: https://www.civilservicepensionscheme.org.uk/planning-for-retirement/what-are-my-options/partial-retirement/abatement/ If you wish to, you may claim your preserved classic pension while you continue to work, by completing and returning the ‘Change of details and retirement application form – deferred members’ form from the Civil Service Pension website: http://www.civilservicepensionscheme.org.uk/members/member-forms/ To assess abatement, the salary of reference used for the preserved pension would usually be the salary that you received on the last day of your original service for your preserved pension. This figure is adjusted to take inflation into account. If you decide to partially retire, this will provide access only to your current pension benefits. You can keep your classic pension preserved, and access it at a later time, as describe above. I hope this answers your query. Please let us know if you have any other questions.

german_keeper

Oscarhound said:

Hi German_keeper. Thanks for responding. It does feel like black hole when it comes to CPI and deferred pensions. Also, what’s the difference between deferred and preserved. I’m used to researching, doing literature reviews etc. BUT this area seems to be the best kept secret😄
From your last paragraph am I right in assuming that I have a deferred legacy pension because I didn’t move to Alpha, and therefore may receive arrears back to 60? That was my initial thoughts when I read the response from MyCivil Service, quoted in previous post. However, I’m so confused with conflicting information and no way of confirming, that I guess I’ll prepare myself for the worst case scenario. 

When I get a definitive answer (31st April when my pension should be paid), I’ll make a post, so that others will know what to expect.
In the interim, if anyone out there already has the definitive answer, please join us and let us know😊

I think preserved/deferred is just 2 names for the same thing.

Not sure about CPI increases, never thought about it. Obviously a pension taken at 60 will have annual CPI uprating applied. If not taken at 60 I assume it will be calculated on FS at point of retirement, so pay rises between age 60 and retirement date would then be relevant, not CPI. The alternative would be to calculate entitlement at 60 and then add CPI but I don't think that would happen.

And markyb2 seems to have given further confirmation that arrears are paid on a preserved/deferred pension. 

Partnership is not deemed to be a Civil Service Pension Scheme for this purpose so yes you are a deferred member.