McCloud Remedy

Spivved1987

I don't know if anyone can help here, but I'm about to make the decision about which option to choose. But I can't get an answer to what to my mind should seem a simple question.

Circumstances:

1 Retired and receiving Civil Service Pension since early 2018

2 Options offered on RSS:

(a) No change to benefits - everything in the form in the Option Summary has a big fat £0 under the appropriate heading;

(b) Choose Alpha benefits for the Remedy Period - Option Summary has a small improvement in the 'Differences', 'Interest Due to You' and 'Ongoing pre-tax annual pension' figures

Now my question (and I wrote to CSP about this but got a non-commital reply) is why would anyone choose Option 1 over Option 2 in those circumstances? That is, why would I choose Nothing over Something? This leads me to believe that there must be some implication I'm not being told about re the consequences of choosing Option 2.

I am certainly not going to phone Crapita and be stuck on the phoneline for hours, so any info gratefully received before I simply return Option 2 as my choice.

hugheskevi

Now my question (and I wrote to CSP about this but got a non-commital reply) is why would anyone choose Option 1 over Option 2 in those circumstances?

(1) Perhaps only a very small advantage, not worth the hassle of change, especially with a struggling administrator

(2) Different survivor benefits - a slightly lower pension might be preferable if it has higher future survivor benefits.

(3) Different Pension Inputs, and so possibly a higher Annual Allowance charge for high earners that means the pension net of a higher debit is actually lower than a smaller gross pension but with a lower debit.

(4) In the middle of an acrimonious divorce, they want to disadvantage their partner in a future pension share, despite it being to their own detriment too

(5) Don't believe the new alpha scheme could ever be better than the old scheme, so already decided to stick with what they have, regardless of the figures.

(6) Legacy scheme might limit the number of individuals that can be nominated to receive a death benefit should the individual die within 5 years of receiving their pension, but the alpha scheme has no limit.

There will be other reasons; those are just some that spring to mind.

That is, why would I choose Nothing over Something?This leads me to believe that there must be some implication I'm not being told about re the consequences of choosing Option 2.

Simply, you have the statutory entitlement to a choice, that is what is set out in Primary legislation. That is regardless of whether that choice is good for you or not, the scheme must provide you with a choice.

As detailed above, there are second-order minor differences between the schemes. They are probably irrelevant to individuals in the vast majority of cases, but that is a choice for the individual to make, not for the scheme to assume on their behalf.

For nuvos members, there would actually be a good justification for the scheme to not offer a choice and default members to nuvos, as the nuvos and alpha rules are almost identical (nuvos was used as a template for alpha). It is almost universally true to say that nuvos will be better than alpha for anyone with a State Pension age above 65 who does not have ill-health retirement and does not die before retirement. Even then, the survivor benefits differ slightly due to slightly different accrual rates, so at what point do you determine that the difference is sufficiently small as to permit the scheme to make decisions on a member's behalf that it doesn't have any relevance

Spivved1987

https://forums.moneysavingexpert.com/discussion/comment/81913471#Comment_81913471

Thanks for this. I'd not heard of Nuvos, and it is not mentioned in any of the correspondence I received.

Your points:

(1) is a bit of a worry. It implies that any change might be subject to the 'Crapita Detriment' ie might lead to them b******ing up existing pensioners' payments in the way that they appear to have done to thousands of people just coming into retirement;

(2) a slightly lower pension might be preferable if it has higher future survivor benefits. Why 'if'? Either it does or it doesn't, surely? If this is an implication, it should have been quantified and laid out in the RSS.

(3)/(4)/(6) not relevant to my circumstances

(5) is rather a good point, and it is probably human nature to suspect some skullduggery!

kassy64

Interested to know how you get on with this. I retired mid 2022 and still awaiting my pack, but from my basic calculations expecting similar offer, My big worry would be that they make a right !!!!!! up and this leads to months /years of stress getting it sorted, Good luck.

DRS1

(2) a slightly lower pension might be preferable if it has higher future survivor benefits. Why 'if'? Either it does or it doesn't, surely? If this is an implication, it should have been quantified and laid out in the RSS.

But would it? Don't assume someone else will check that sort of thing. Check it yourself. You are a member of both schemes so it should be easy enough to look up what the survivor's benefits are if you die.

LHW99

I suppose if you were very close to the top of a tax band and any increase would tip you over might make some people go for a lower payment option? Some don't want to pay more tax, even if they are still a bit better off.

PeteMc

I'm still waiting for my RSS but I expect my combination of Classic and Alpha that I took nearly 4 years ago will be the better option. Until I receive it though I don't know.

My wife recently had her RSS from another public service. She had stayed on the old scheme but the new (derided by many of her former colleagues as being not as good) scheme gave a total, to her betterment, of just under 50k comprising of additional lump sum, additional pension and interest.

It depends very much on your personal circumstances.

Spivved1987

https://forums.moneysavingexpert.com/discussion/comment/81913945#Comment_81913945

Don't assume someone else will check that sort of thing. Check it yourself.

Fine words for a Forum!

ClashCityRocker1

In my case the alpha survivors' pension was a lower percentage of pension but the alpha pension was higher so that the lower percentage of alpha was still higher than 50% of classic.

My understanding is that historic pension input statements won't be revised.

In answer to the question - if one option wasn't better/different than the other there would be no need for a choice. So asking why somebody might choose the apparently worse option is they usually won't!

horsewithnoname

they are obliged to give you the choice so they give you both options.
it is more complicated for partially retired people as you are also making a choice about when you retire and whether you think your legacy or alpha pension will do better in the long run.
if I live long enough to get my choice then I’ll likely go with alpha because I think having the inflation adjustment will do better than any pay award is likely to. As for the immediate effect, as far as I can work out, there won’t be a lot in it. Though I do have a small amount of abatement which will go if I pick alpha, vs more WPS if I choose classic.