Civil Service McCloud lump sum confusion

DrWillCUNow

Myself and my wife have been planning for retirement (I'm USS and she's Civil Service). She has been subject to the McCloud remedy but we have been going round in circles as to what this means, and the Civil Service pension modeller is not helping.

The first issue is the lump sum (I tacked this onto the end of someone else's post, but perhaps others have similar issues?). In her 2024 statement, she is due a classic plus pension of £37k at age 60 and a lump sum of £29k, yet in the modeller she is due a pension at 60 of £33k and a lump sum of £220k. Even adjusting the pension/lump sum ratio to the same pension, there is an 8x difference in the lump sum between the statement and the modeller, surely this can't be right?

Secondly, the statement gives her last day in Classic Plus as 31st March 2022 (brought forward due to McCloud), yet in the 'Your Classis Plus benefits' section of the statement, the small print says that 'classic plus benefits include a standard lump sum which is three times your pension in respect of service up to 30th September 2002 only'. Surely both can't be right in terms of dates?

Arghh!

Dazed_and_C0nfused

DrWillCUNow said:

Myself and my wife have been planning for retirement (I'm USS and she's Civil Service). She has been subject to the McCloud remedy but we have been going round in circles as to what this means, and the Civil Service pension modeller is not helping.

The first issue is the lump sum (I tacked this onto the end of someone else's post, but perhaps others have similar issues?). In her 2024 statement, she is due a classic plus pension of £37k at age 60 and a lump sum of £29k, yet in the modeller she is due a pension at 60 of £33k and a lump sum of £220k. Even adjusting the pension/lump sum ratio to the same pension, there is an 8x difference in the lump sum between the statement and the modeller, surely this can't be right?

Secondly, the statement gives her last day in Classic Plus as 31st March 2022 (brought forward due to McCloud), yet in the 'Your Classis Plus benefits' section of the statement, the small print says that 'classic plus benefits include a standard lump sum which is three times your pension in respect of service up to 30th September 2002 only'. Surely both can't be right in terms of dates?

Arghh!

Don't know much about Classic Plus but the basic guide seems to suggest the automatic lump sum only applies to service prior to 1 October 2002.

I suspect by choosing Classic Plus over Classic she has limited the automatic lump sum to that period prior to 1 October 2002.

Maybe in return for a better normal pension accrual rate 🤔

hugheskevi

In her 2024 statement, she is due a classic plus pension of £37k at age 60 and a lump sum of £29k, yet in the modeller she is due a pension at 60 of £33k and a lump sum of £220k. Even adjusting the pension/lump sum ratio to the same pension, there is an 8x difference in the lump sum between the statement and the modeller, surely this can't be right?

What about alpha? The modeller lump sum setting also includes alpha. Are you looking at pension and lump sum from both classic plus and alpha under each Remedy option?

Secondly, the statement gives her last day in Classic Plus as 31st March 2022 (brought forward due to McCloud), yet in the 'Your Classis Plus benefits' section of the statement, the small print says that 'classic plus benefits include a standard lump sum which is three times your pension in respect of service up to 30th September 2002 only'. Surely both can't be right in terms of dates?

Both dates are correct.

Pension accrual from 1st October did not include an automatic lump sum, just accrual of final salary pension with Normal Pension age of 60 and an accrual rate of 1/60. Accrual prior to 1st October 2002 was final salary pension, NPA 60, accrual rate of 1/80 with automatic lump sum of 3x pension.

DrWillCUNow

hugheskevi said:

In her 2024 statement, she is due a classic plus pension of £37k at age 60 and a lump sum of £29k, yet in the modeller she is due a pension at 60 of £33k and a lump sum of £220k. Even adjusting the pension/lump sum ratio to the same pension, there is an 8x difference in the lump sum between the statement and the modeller, surely this can't be right?

What about alpha? The modeller lump sum setting also includes alpha. Are you looking at pension and lump sum from both classic plus and alpha under each Remedy option?

Secondly, the statement gives her last day in Classic Plus as 31st March 2022 (brought forward due to McCloud), yet in the 'Your Classis Plus benefits' section of the statement, the small print says that 'classic plus benefits include a standard lump sum which is three times your pension in respect of service up to 30th September 2002 only'. Surely both can't be right in terms of dates?

Both dates are correct.

Pension accrual from 1st October did not include an automatic lump sum, just accrual of final salary pension with Normal Pension age of 60 and an accrual rate of 1/60. Accrual prior to 1st October 2002 was final salary pension, NPA 60, accrual rate of 1/80 with automatic lump sum of 3x pension.

Yes, I assume there will be a contribution from Alpha but I can't imagine it will make up the difference from £29k to £220k - I think there is a £1 pension to £12 lump sum optional conversion but the difference just seems to be too big.

Thanks for the info on the dates, that makes sense.

hugheskevi

DrWillCUNow said:

hugheskevi said:

In her 2024 statement, she is due a classic plus pension of £37k at age 60 and a lump sum of £29k, yet in the modeller she is due a pension at 60 of £33k and a lump sum of £220k. Even adjusting the pension/lump sum ratio to the same pension, there is an 8x difference in the lump sum between the statement and the modeller, surely this can't be right?

What about alpha? The modeller lump sum setting also includes alpha. Are you looking at pension and lump sum from both classic plus and alpha under each Remedy option?

Secondly, the statement gives her last day in Classic Plus as 31st March 2022 (brought forward due to McCloud), yet in the 'Your Classis Plus benefits' section of the statement, the small print says that 'classic plus benefits include a standard lump sum which is three times your pension in respect of service up to 30th September 2002 only'. Surely both can't be right in terms of dates?

Both dates are correct.

Pension accrual from 1st October did not include an automatic lump sum, just accrual of final salary pension with Normal Pension age of 60 and an accrual rate of 1/60. Accrual prior to 1st October 2002 was final salary pension, NPA 60, accrual rate of 1/80 with automatic lump sum of 3x pension.

Yes, I assume there will be a contribution from Alpha but I can't imagine it will make up the difference from £29k to £220k - I think there is a £1 pension to £12 lump sum optional conversion but the difference just seems to be too big.

Thanks for the info on the dates, that makes sense.

There is also a contribution from 2002-15 (or 2022) service in Classic Plus. That is zero under standard lump sum, but counts toward maximum lump sum.

DrWillCUNow

There is also a contribution from 2002-15 (or 2022) service in Classic Plus. That is zero under standard lump sum, but counts toward maximum lump sum.

Thanks for taking the time to reply, really appreciate it. Could you explain that last bit? I've spend a few months wrestling with USS pensions (and now understand more) but the Civil Service one is a whole new area for me!

hugheskevi

DrWillCUNow said:

There is also a contribution from 2002-15 (or 2022) service in Classic Plus. That is zero under standard lump sum, but counts toward maximum lump sum.

Thanks for taking the time to reply, really appreciate it. Could you explain that last bit? I've spend a few months wrestling with USS pensions (and now understand more) but the Civil Service one is a whole new area for me!

Service before 2002 in classic plus has a standard lump sum that is shown on ABS. This can be increased to maximum lump sum.
Service after 2002, whether in classic plus or alpha, has no automatic lump sum. So there is nothing to include on ABS. but it can be increased to maximum lump sum.
So lump sum on ABS shows only standard lump sum on pre-2002 service. Anything on the lump sum setting above 0% on modeller will convert post 2002-pension into lump sum, and so will be higher than lump sum shown on ABS.

DrWillCUNow

Brilliant! If I set the Lump Sum calculator to Zero I get numbers that correspond to the ABS. Phew, one more small part understood! Thanks for that!