Civil Service Classic pension - When to take?

Seamonster_2

My wife worked for the Civil Service from 1976 to 1985 and has a Classic pension from that period. She is 67 and still in full-time employment, for a private company.

We've been looking at the Civil Service Pension Portal and are unclear about a couple of things.

1.  The Portal guidance states: "Normal Pension Age is the age at which you can take your full benefits without any reductions for early payment. For most classic members, this is age 60". Does this mean that she would have been eligible to take the pension at 60? Or does her "standard" retirement age of 66 apply?

2.  The Portal also states: "Your benefits will continue to increase in line with changes in prices (i.e. inflation) up to your Normal Pension Age". Does this mean the pension is now effectively "frozen" and wil no longer be adjusted for inflation (as she has passed retirement age)?

If my interpretation of (2) is correct, it would seem that it is in her interests to take the pension ASAP rather than wait until she actually retires.

I'm also concerned that she may have lost out on a number of years of pension payments by not taking the pension as soon as she was eligible, though that may be a misunderstanding on my part.

Any advice appreciated.

Marcon

Seamonster_2 said:

My wife worked for the Civil Service from 1976 to 1985 and has a Classic pension from that period. She is 67 and still in full-time employment, for a private company.

We've been looking at the Civil Service Pension Portal and are unclear about a couple of things.

1.  The Portal guidance states: "Normal Pension Age is the age at which you can take your full benefits without any reductions for early payment. For most classic members, this is age 60". Does this mean that she would have been eligible to take the pension at 60? Or does her "standard" retirement age of 66 apply?

She was eligible to take her Classic Pension at age 60.

Seamonster_2 said:

2.  The Portal also states: "Your benefits will continue to increase in line with changes in prices (i.e. inflation) up to your Normal Pension Age". Does this mean the pension is now effectively "frozen" and wil no longer be adjusted for inflation (as she has passed retirement age)?

If my interpretation of (2) is correct, it would seem that it is in her interests to take the pension ASAP rather than wait until she actually retires.

It's not frozen. The pension from age 60 will have cost of living increases. There's no 'late retirement factor' - some schemes add an extra bit of cash to reflect the fact the pension wasn't taken when the member was first eligible to do so.

Seamonster_2 said:

I'm also concerned that she may have lost out on a number of years of pension payments by not taking the pension as soon as she was eligible, though that may be a misunderstanding on my part.

Happily it's a misunderstanding. Arrears of pension will be paid when she claims her Classic pension. Apart from any tax free lump sum she opts for, these arrears will be  paid as one (taxable) lump sum, which could tip her into a higher tax bracket. If so, ask for a year by year breakdown of what she would have received had she claimed at 60, and she can (if it's to her advantage in tax terms) ask HMRC to treat those payments as being received (and thus taxable) in the tax year when she could have received them.

Dazed_and_C0nfused

1.  Yes, the Classic pension was payable from age 60.  What is this "standard" retirement age you refer to 🤔

2.  Whilst deferred to NPA and once in payment it is increased each April by the previous Septembers CPI increase.  No idea what happens in the period from NPA to when it is put into payment if that is later than 60.

What made her think the rules had changed from when she was an active member of Classic?

kjs31

Dazed_and_C0nfused said:

1.  Yes, the Classic pension was payable from age 60.  What is this "standard" retirement age you refer to 🤔

What made her think the rules had changed from when she was an active member of Classic?

Standard retirement age meaning state pension age I imagine. Many public sector pensions appear to have increased their retirement age in line with the state pension age so it’s an easy mistake to make I guess. Plus if they didn’t have the correct address for someone the pre retirement letter wouldn’t have arrived. 

Seamonster_2

Thanks for the replies - that's really helpful info.

By "standard retirement age", I did indeed mean state pension age.

So it seems that nothing will be lost if my wife waits until actual retirement before drawing this pension. She plans to retire at the end of this year, so we will get the ball rolling soon, as I understand the Civil Service require around six months' notice.