Civil service pension: Premium final pensionable earnings and AVC contributions impact

NewRoute

I've got something in my head and am convinced that i'm going to diddle myself out of money. I've tried googling and AI-ing it but can't locate a sufficiently clear answer. I wonder if someone can help?

When the assessment for premium scheme entitlement is undertaken it assesses your final pensionable earnings as part of the calculation.

What counts as final pensionable earnings? Specifically, if i'm making contributions to the AVC scheme, will that reduce what is assessed as my final pensionable earnings?

To my mind an AVC is different to EPA or added pension in that it's done outwith the main scheme via a private provider, so there may be different considerations ? But as i say i can't find a reliable source that confirms either way. I would have thought that if AVC contributions did reduce your final pensionable earnings that i would have located something confirming this, but keen to be 100% certain.

Thanks

hugheskevi

What counts as final pensionable earnings?

The definition is set out in rule A2 on page 9 of the 2002 rules.

Specifically, if i'm making contributions to the AVC scheme, will that reduce what is assessed as my final pensionable earnings?

AVCs have no effect on pensionable earnings. The AVC scheme is a net pay scheme, not salary sacrifice.

To my mind an AVC is different to EPA or added pension in that it's done outwith the main scheme via a private provider, so there may be different considerations ?

EPA and Added Pension do not affect pensionable earnings either.

horsewithnoname

pensionable pay. It’s shown on your payslip

hugheskevi

https://forums.moneysavingexpert.com/discussion/comment/82112586#Comment_82112586

Be careful of the difference between final pensionable earnings and pensionable pay.

Pensionable pay is the sum of all the pensionable elements of remuneration, which may be broader than salary, eg, older recruitment and retention allowances are pensionable, london weighting (if separate to pay), etc. Bonuses are usually not pensionable.

Final pensionable earnings in Premium is the best of 3 measures, looking back up to 13 years ago, and taking inflation-adjusted past pensionable earnings into account within the calculation. This means final pensionable earnings are commonly much higher than pensionable pay, given long periods of below-inflation pay increases for those who have not been promoted.

horsewithnoname

https://forums.moneysavingexpert.com/discussion/comment/82112599#Comment_82112599

oh right. Thank you 👍