Civil Service 'Classic' and early retirement (pre 55)

MurdoMacSy

Thanks @simonseys. MyCSP are pretty woeful - I’ve endured a running 18 month issue with them to sort out Emmy length of service! 

hugheskevi

MurdoMacSy said:

Having spent some time researching and with confirmation of end date of my current high period of pay on 30/11/25 I have decided to remain in Alpha with extra contributions till circa 01/04/27 and then switch to partnership giving me the 3 year look back window into my highest pay period circa £60k before I drop down to circa £50k. A couple of years maxing out partnership then call it a day at 55. I’ll have to wait a couple of years for any DC funds but with 28.47 years in classic, 5 years of above average wages into Alpha and a decent lump sum it feels like my plan will give me best of all worlds. I owe you a coffee! 

If these dates work, would I be correct that once I switch the deferred classic is subject to annual CPI rises until it is drawn? 

Sounds like a good plan - you would be surprised how many people in a similar position to yours would completely fail to do any planning, carry on regardless, and live in blissful ignorance of how much money they lost due to a failure to plan.

When you switch to Partnership, and assuming your plans above play out as expected, your classic pension would be calculated on 01/04/27 based on your highest earnings which will be somewhere around Dec 2024 to Nov 25. The c£60K earnings from the 2024-25 period will be increased in line with inflation to 01/04/27 as it is taken from a past period, and your classic pension will be based on your 28.47 years of service and the inflation-adjusted pay from the past period. Then the classic award will increase in line with CPI until you take it with actuarial reduction at age 55.

Just be careful to watch out that when you move back to a lower salary, that the cash amount you receive doesn't creep above the previous higher salary. The classic lookback period is based on cash value, not real terms value, so if there happened to be a couple of years of high inflation and high salary increases you could lose out. Seems unlikely, but you never know.

FIREDreamer

Can you still access at 55 in 2029 given access age increases to 57 in 2028?

hugheskevi

FIREDreamer said:

Can you still access at 55 in 2029 given access age increases to 57 in 2028?

Those who joined the Civil Service pension scheme before 4 November 2021 will have a protected minimum pension age of 55 (50 if joined before 6 April 2006).

FIREDreamer

hugheskevi said:

FIREDreamer said:

Can you still access at 55 in 2029 given access age increases to 57 in 2028?

Those who joined the Civil Service pension scheme before 4 November 2021 will have a protected minimum pension age of 55 (50 if joined before 6 April 2006).

Thanks - worth checking!

MurdoMacSy

hugheskevi said:

MurdoMacSy said:

Having spent some time researching and with confirmation of end date of my current high period of pay on 30/11/25 I have decided to remain in Alpha with extra contributions till circa 01/04/27 and then switch to partnership giving me the 3 year look back window into my highest pay period circa £60k before I drop down to circa £50k. A couple of years maxing out partnership then call it a day at 55. I’ll have to wait a couple of years for any DC funds but with 28.47 years in classic, 5 years of above average wages into Alpha and a decent lump sum it feels like my plan will give me best of all worlds. I owe you a coffee! 

If these dates work, would I be correct that once I switch the deferred classic is subject to annual CPI rises until it is drawn? 

Sounds like a good plan - you would be surprised how many people in a similar position to yours would completely fail to do any planning, carry on regardless, and live in blissful ignorance of how much money they lost due to a failure to plan.

When you switch to Partnership, and assuming your plans above play out as expected, your classic pension would be calculated on 01/04/27 based on your highest earnings which will be somewhere around Dec 2024 to Nov 25. The c£60K earnings from the 2024-25 period will be increased in line with inflation to 01/04/27 as it is taken from a past period, and your classic pension will be based on your 28.47 years of service and the inflation-adjusted pay from the past period. Then the classic award will increase in line with CPI until you take it with actuarial reduction at age 55.

Just be careful to watch out that when you move back to a lower salary, that the cash amount you receive doesn't creep above the previous higher salary. The classic lookback period is based on cash value, not real terms value, so if there happened to be a couple of years of high inflation and high salary increases you could lose out. Seems unlikely, but you never know.

Thanks again @hugheskevi. Yes I’m amazed how little some of my own peer age group know about pensions. Admittedly I wish I’d been so savvy myself 20 odd years ago but hey, that’s life and a lot of things are better in hindsight - I didn’t expect to be doing this job much longer than a few years at that point! I think highly unlikely that high salary increases will see me losing out - but as you say you never know. I could always switch back to Alpha if some miracle happens! 

NewRoute

I have vaguely similar circumstances to @MurdoMacSy. I joined the CS in 2003 (premium and alpha member) and intend to have a drop in salary in a few years. The 3 year aspect will potentially be a key element for me also. I'm particularly interested in this comment from @hugheskevi:

"You could switch to Partnership to lock in the higher salary period before it drops out of the window."

I can't find where this principle is identified in the scheme guides, hoping someone could point me in the right direction?

Thanks

hugheskevi

NewRoute said:

I have vaguely similar circumstances to @MurdoMacSy. I joined the CS in 2003 (premium and alpha member) and intend to have a drop in salary in a few years. The 3 year aspect will potentially be a key element for me also. I'm particularly interested in this comment from @hugheskevi:

"You could switch to Partnership to lock in the higher salary period before it drops out of the window."

I can't find where this principle is identified in the scheme guides, hoping someone could point me in the right direction?

Thanks

Your position as a Premium member is completely different.

Premium uses very different definitions of final pensionable earnings, looking at the highest of:

1. Pensionable earnings in the last 12 months
2. Highest inflation-adjusted pensionable earnings from each of the last 4 completed Scheme Years (1 April to 31 March)
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

By switching to Partnership you leave the Defined Benefit scheme, hence becoming a deferred member and having your pension calculated at date of exit using the final pensionable earnings applicable at the date of leaving.

You won't find it detailed in any scheme guide, beyond a description of what happens if you leave the scheme before retirement.

NewRoute

Thanks @hugheskevi, much appreciated. 

So for me, i'm presently 50, hoping to retire when i'm 55 or 56. I aim to get to the top of my present salary scale, and do a full year, which would be complete by 31/3/28. This should ensure i lock in the "Highest inflation-adjusted pensionable earnings from each of the last 4 completed Scheme Years (1 April to 31 March)". This should guarantee maximum benefit for my service under premium. I'm content to tolerate the hassle and stress of this job until then, after which i'd revert back to my previous grade for my last 2 or 3 years. 

That would mean that as long as i retired less than 4 years after 31/3/28, i'd get the benefits of being at my present pay grade fed through into the premium side of my pension. Rather than switching to partnership i think i'll be better off sticking with alpha.

Hopefully i've interpreted things correctly but if anyone can spot any flaws in my plan, please get stuck in! 

hugheskevi

NewRoute said:

So for me, i'm presently 50, hoping to retire when i'm 55 or 56. I aim to get to the top of my present salary scale, and do a full year, which would be complete by 31/3/28. This should ensure i lock in the "Highest inflation-adjusted pensionable earnings from each of the last 4 completed Scheme Years (1 April to 31 March)". This should guarantee maximum benefit for my service under premium. I'm content to tolerate the hassle and stress of this job until then, after which i'd revert back to my previous grade for my last 2 or 3 years. 

That would mean that as long as i retired less than 4 years after 31/3/28, i'd get the benefits of being at my present pay grade fed through into the premium side of my pension. Rather than switching to partnership i think i'll be better off sticking with alpha.

It would be sensible to work out what your final pensionable earnings are under each of the 3 legs used to calculate final pensionable earnings. With pay freeze/restraint/pauses over the last 15 years many members' best inflation-adjusted years are from a long time ago, even if they have been promoted.

In the coming years, you might well find that your pensionable earnings fails to keep pace with CPI if you remain in the same grade. It is something to keep an eye on so you know when the best measure of final pensionable earnings will drop out of the look-back period.

But assuming that the best measure is from scheme year 2027/28, running from 1/4/27 to 31/3/28, then as long as you leave the scheme by 30/3/2032 then the inflation adjusted amount from 2027/28 would be used to calculate your Premium pension.

Remember however that the final leg (average of best 3 consecutive years in last 13) may well be very similar to the 2027/28 inflation-adjusted figure once you have done 3 complete scheme years at your higher grade, and if so, there wouldn't be any pressing date by which you needed to leave the scheme. This is a key difference to Classic - Classic only looks back 3 years, Premium looks back 13+ years.

As you are 50, alpha should be of greater value to you than Partnership, and the difference grows every year you get older. So unless you were switching to lock in a higher Premium final pensionable earnings figure that was about to drop-out the equation you would expect to stay in alpha.