Beware State Pension shock when partner dies

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  • Kynthia
    Kynthia Posts: 5,665
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    antonic wrote: »
    I am proud civil servant of many years, and according to my 2017 pension forecast I will get a whopping great gold plated pension of approx £7500 pa if I continue working to 2028 , when I complete 40 years.

    What makes it even sweeter is that Muscles750 is paying towards it , with all of his hard work.

    Thanks mate !

    As far as I'm aware the civil service scheme benefits statements don't forecast what you'll get if you continue contributing. They are a statement of what you have accumulated to date. Therefore are you sure it isn't telling you that if you left the scheme now, at the scheme retirement age you would get an amount that is worth £7.5k in today's money?
    Don't listen to me, I'm no expert!
  • antonic
    antonic Posts: 1,977
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    edited 3 February 2018 at 3:15PM
    Hi Huybh

    I am currently earning £20074 pa

    I have 26 1/2 years under the classic scheme, and currently 2 and a bit years under the Alpha scheme.

    I have no intention of getting promoted between now and my projected retirement date of 2028.
    I look forward to your projection and wan to thank you in advance for your kind offer of a projection.
    hyubh wrote: »
    Confirm your current salary and age, together with whether you opted for Classic Plus when Premium came in for new members in 2002, and I will happily give a more accurate estimate of your pension after 40 years service than the spuriously low £7,500 pa figure.
  • JoeCrystal
    JoeCrystal Posts: 3,001
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    antonic wrote: »
    Hi Huybh

    I am currently earning £200074 pa.

    I am assuming that your salary got an extra zero typo?! :eek:
  • xylophone
    xylophone Posts: 44,140
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    The Civil Service scheme switched to 1/60ths accrual earlier than the LGPS, but without automatically moving existing members to it. So, let's assume the OP didn't elect to switch, so had 27 years at 1/80ths final salary (+3/80th lump sum) when the scheme changed to CARE.

    OP said (at 7.2.17) post 33 http://forums.moneysavingexpert.com/showthread.php?p=72063384#post72063384
    I have been in another Govt Dept now for 28 years.

    Wouldnt leave as I only have 12 years to go till I can retire on my contributions under the old PCPS Pension Scheme.
  • hyubh
    hyubh Posts: 3,526
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    antonic wrote: »
    I am currently earning £20074 pa

    I have 26 1/2 years under the classic scheme, and currently 2 and a bit years under the Alpha scheme.

    I have no intention of getting promoted between now and my projected retirement date of 2028.
    I look forward to your projection and wan to thank you in advance for your kind offer of a projection.

    Simples:

    Classic: £20,074 x 1/80 x 26.5 = £6,650 pa (+ £19,950 lump sum)
    Alpha: £20,074 x 1/43.1 x 12 = £5,589 pa
    Total: £12,248 pa (+ £19950 lump sum; additional lump sum available by commuting pension at a rate of £12 of lump sum per £1 of pension - not a good idea).

    Plus state pension: with 12 years between the end of contracting out and prospectively quitting work, you are on track for a full single tier pension of (currently) £8,297 pa. So, 12,248 + 8,297 = slightly more that your current salary (!).

    Caveats:

    - I don't think you've confirmed your age? Taking a Classic pension after NPA (60) doesn't attract an actuarial increase, but your Alpha NPA is noticeably higher (SPA), and would be subject to an actual reduction if you took your pension earlier than that. (On the other hand, were you to draw your pension after SPA, then your Alpha benefits would be subject to an actuarial increase.)

    - Explicitly ruling out going for a promotion is a risky thing if pay awards fail to keep up with inflation (which is what has happened in recent years). Would be a good idea to reconsider that.
  • antonic
    antonic Posts: 1,977
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    Sorry I didnt give my age .

    I am 51 , with 29 years and 3 months service.

    My SPA date is projected to be 67.

    I can retire at 60 (if I want) from the Civil Service but dont intend to, in fact I intend to work till I get to 67, at which point I would have accrued nigh on the maximum 45 years I can put into my CS Pension.

    I dont want to be promoted because if I did I would have to sign a new contract which has worse terms & conditions than I have now (reduced sick pay/ sick leave etc)

    Thanks for your help, I appreciate it

    QUOTE=hyubh;73826674]Simples:

    Classic: £20,074 x 1/80 x 26.5 = £6,650 pa (+ £19,950 lump sum)
    Alpha: £20,074 x 1/43.1 x 12 = £5,589 pa
    Total: £12,248 pa (+ £19950 lump sum; additional lump sum available by commuting pension at a rate of £12 of lump sum per £1 of pension - not a good idea).

    Plus state pension: with 12 years between the end of contracting out and prospectively quitting work, you are on track for a full single tier pension of (currently) £8,297 pa. So, 12,248 + 8,297 = slightly more that your current salary (!).

    Caveats:

    - I don't think you've confirmed your age? Taking a Classic pension after NPA (60) doesn't attract an actuarial increase, but your Alpha NPA is noticeably higher (SPA), and would be subject to an actual reduction if you took your pension earlier than that. (On the other hand, were you to draw your pension after SPA, then your Alpha benefits would be subject to an actuarial increase.)

    - Explicitly ruling out going for a promotion is a risky thing if pay awards fail to keep up with inflation (which is what has happened in recent years). Would be a good idea to reconsider that.[/QUOTE]
  • antonic wrote: »
    Sorry I didnt give my age .

    I am 51 , with 29 years and 3 months service.

    My SPA date is projected to be 67.

    I can retire at 60 (if I want) from the Civil Service but dont intend to, in fact I intend to work till I get to 67, at which point I would have accrued nigh on the maximum 45 years I can put into my CS Pension.
    Curious about the 45 years, when I started work I was a CS but after about 23 years we became an Agency, so TUPE was enacted, my boss transferred his pension to that and I froze my CS pension and took out the 2nd FS pension, almost the same terms, so with the two I had, one would never reach 40 years alone. My boss on the other hand got to 40 years, at age 58 and found he would have lost an amount of money, so retired early. So is the CS pension definitely 45 years of contributions?
    Paddle No 21 :wave:
  • hyubh
    hyubh Posts: 3,526
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    antonic wrote: »
    I am 51, with 29 years and 3 months service.

    Thanks. Strictly speaking, years and months no longer matter however - your Classic reckonable service isn't getting any bigger, and your Alpha benefits are simply determined by your pensionable pay during the year, not the year itself.
    I can retire at 60 (if I want) from the Civil Service but dont intend to, in fact I intend to work till I get to 67, at which point I would have accrued nigh on the maximum 45 years I can put into my CS Pension.

    45 was the Classic cap. As you're now in Alpha, there is no cap. (Nuvos was/is the same.) What going at 67 will ensure is no actuarial reduction on your Alpha benefits, assuming your SPA doesn't rise in between (which I think you can be reasonably confident of).
    I dont want to be promoted because if I did I would have to sign a new contract which has worse terms & conditions than I have now (reduced sick pay/ sick leave etc)

    Think about the effect on your pension however - between 60 and 67, the value of your Classic benefits will fall because you are past their NPA, you are unable to actually take them, and there is no actuarial increase to reflect the fact. Increasing your pay above inflation would counteract that, since it would increase the value of your Classic service when you do finally take the pension.
  • hyubh
    hyubh Posts: 3,526
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    Curious about the 45 years, when I started work I was a CS but after about 23 years we became an Agency, so TUPE was enacted, my boss transferred his pension to that and I froze my CS pension and took out the 2nd FS pension, almost the same terms, so with the two I had, one would never reach 40 years alone. My boss on the other hand got to 40 years, at age 58 and found he would have lost an amount of money, so retired early. So is the CS pension definitely 45 years of contributions?

    Classic, Classic Plus and Premium was max 40 reckonable years, then max 45 from 2008. Nuvos has a max CARE pension accrual of 75% final pay. Alpha has no cap at all.

    However, going by what you say, Civil Service scheme rules were irrelevant because you both left the PCSPS for the agency's scheme (only difference being, the manager transferred his PCSPS pension into it but you didn't with yours?). Maximum accrual caps in DB schemes were nevertheless common generally because the tax system back in the day enforced its own, rather complicated version. While A-Day in 2006 got rid of that in favour of the much simpler Lifetime Allowance system, many schemes kept their old caps, or like the Civil Service scheme, only slowly removed them, and in a piecemeal fashion.
  • Marvel1
    Marvel1 Posts: 7,157
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    westport wrote: »
    So when a partner passes away you will still have the same household bills, but will only get half the income.

    I got a mortgage on my home 10 years ago as a single person and still today living as a single person, the bills are not that bad alone.

    You get 25% off council tax single person.
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