Civil Service Pension - no more lump sum, what to do?

Luis
Luis Posts: 637 Forumite
edited 20 January 2014 at 6:48PM in Pensions, annuities & retirement planning
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Hello,

I am 28 yrs old, female and have just joined the Civil Service 'Premium' pension scheme, which no longer offers a lump sum on completion, and works on 1/60 contributions. I have about 5yrs worth of my old NHS pension scheme stored. I have the following questions:

:confused: Should I transfer my NHS contributions in to my new civil service pension, which I understand I can do as part of the Public Sector Transfer Club (I am tempted to do this as I feel that the benefits of leaving a 5yr pension are few...?)

:confused: What can I do to save / plan to get a lump sum for retirement - what are the best schemes or plans in order to achieve a little nest egg for retirement - which to be honest I was looking forward to from when I was in the NHS - drat the Civil Service for moving the goal posts!

:confused: What can I do to top up my Civil Sevice Pension - as I have no intention of working until I am 60 (or even 65 as it looks like it is going to be, yuk), and want a decent pension on which to retire.

Any advice would be most gratefully received,

Luis.
"It was not my intention to do this in front of you. For that, I'm sorry. But you can take my word for it, your mother had it comin'."

Overlord for the Axis of Evil (part time) :D
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Comments

  • dunstonh
    dunstonh Posts: 116,358 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    The "premium" version still allows a tax free lump sum in the same way the "classic" version does.

    1 - Transferring depends on what you lose against what you gain. On similar "Govt" based schemes, there can still be differences so you need to find out what the old one will offer, then pass that info to the new scheme to see what they offer. Whichever is higher....

    2 & 3- added years within the scheme is almost certainly the best option now that you know lump sum is available.

    Remember that you do not get the state pension until age 65 and there is no SERPS/S2P or contracted in/out benefits either. So if you want to stop early, you will need to fund that gap.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • swebber
    swebber Posts: 87 Forumite
    Luis,

    As DustonH said, but also bear in mind the changes to be inplimented in 2013, for current CS employees. You may gain more / less from this, so it is also worth considering.
  • TrickyTrotter_2
    TrickyTrotter_2 Posts: 126 Forumite
    Further information on your options here:

    https://www.civilservice-pensions.gov.uk
  • Luis
    Luis Posts: 637 Forumite
    Thanks to everyone for their help.

    The Premium scheme does offer a lump sum facility, but at a cost of giving up part of your pension - they take £1 off for every £12 taken as lump sum. Is this still a good deal, or should I be looking to find another way to save for a lump sum in order to spare my pension?

    Also - what is the best way to 'fund the gap' if I do retire earlier than I can take my pension?

    Eeeek - only 28 and already panicking about my pension! :eek:

    Thanks.
    "It was not my intention to do this in front of you. For that, I'm sorry. But you can take my word for it, your mother had it comin'."

    Overlord for the Axis of Evil (part time) :D
  • Luis
    Luis Posts: 637 Forumite
    Anyone able to help with last post?

    Sorry to mither :(

    Luis.
    "It was not my intention to do this in front of you. For that, I'm sorry. But you can take my word for it, your mother had it comin'."

    Overlord for the Axis of Evil (part time) :D
  • dunstonh
    dunstonh Posts: 116,358 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    Luis wrote:
    Anyone able to help with last post?

    Sorry to mither :(

    Luis.

    I responded to your same question in the savings section.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • thefirs
    thefirs Posts: 699 Forumite
    First Anniversary Combo Breaker First Post
    Luis wrote:
    The Premium scheme does offer a lump sum facility, but at a cost of giving up part of your pension - they take £1 off for every £12 taken as lump sum. Is this still a good deal, or should I be looking to find another way to save for a lump sum in order to spare my pension?
    The extra monthly pension is a very good deal, though given the hatchet that the government is taking to public sector pensions it can't stay that high. Look at the annuity rates that insurance companies might quote you at age 65 - I doubt that you'd get 8.3% on an index-linked pension in the commercial arena.
    Also - what is the best way to 'fund the gap' if I do retire earlier than I can take my pension?
    Savings, investment, property. Stop spending that meagre cash reward you earn in your public-sector job on clothes, eating out, and holidays. Start getting your workday outfits at Oxfam, cycle to work (you'll live longer to enjoy the pension), and buy a tent. Stash the money saved until you're ready to blow it.
    Eeeek - only 28 and already panicking about my pension!
    If only there were more like us. It's our taxes that fund those who forget or don't care to do all these things and who end up on means-tested benefits in retirement.
  • Luis
    Luis Posts: 637 Forumite
    Thanks to everyone - especially the patient Dunstonh!

    Thefirs - If I cycle the 47 miles each way to work I shall last about a week :D

    I shall now set about implementing everyone's helpful advice - thankyou again,

    Luis.
    "It was not my intention to do this in front of you. For that, I'm sorry. But you can take my word for it, your mother had it comin'."

    Overlord for the Axis of Evil (part time) :D
  • Pal
    Pal Posts: 2,076 Forumite
    thefirs wrote:
    If only there were more like us. It's our taxes that fund those who forget or don't care to do all these things and who end up on means-tested benefits in retirement.

    It is our taxes that pay for the pensions provided by the civil service. As a result it would save us taxpayers some money if we advised civil service workers like Luis to opt out of their pension scheme and instead receive much lower state handouts when they retire... ;)
  • Pal
    Pal Posts: 2,076 Forumite
    Actually an even cheaper option would be to force Luis to cycle to work every day. After a week we wouldn't have to pay anything! :)
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