To ask about Civil Service pensions?

[Snickerdoodles]

I learned last night that when civil servants start receiving their pensions, they get paid a set amount of money per year from the time they retire for the rest of their life.

From what I understood, the annual amount they get paid in their pension is based on their starting salary.

I only read this on an online message board and can’t find anything else to back it up. Is this correct?

Of course it is. That's what a pension is. Is this really a surprise?

Hmm, it used to be based on final salary but is now career average.

Bluelady, the reason why I’m confused and why I posted here is because I’ve never heard of a pension being based on someone’s starting salary. And I also can’t find anything that explains how much the employer contributions are for this sort of pension.

Not quite correc, but close.

There are several different versions of cs pension as they've changed over the years. But in general, the employee pays a percentage of their salary in every month. When they retire, they receive a set amount per month which is based on the number of years of service and their final salary (at least I think it's final salary, I'm sure someone can correct me if I'm wrong).

What does career average mean, please?

What confused me was why the pension seems to be based on someone’s starting salary. It doesn’t seem to take pay rises into account.

xandersmom I may be wrong, but I didn’t think the Civil Service did final salary pensions any more. I’m interested in finding out about the Alpha pension.

Yup it's rhubarb now.

Years of being a pension prisoner only for the bloody thing to be pulled.

Ok so my civil service pension will be nothing to do with my starting salary.
I suspect that whoever posted this meant final salary. The first part of my pension from before the rules changed will be a certain fraction of whatever my final salary is. So in my case 8/60 of my final salary.
The second part is based on a calculation in relation to whatever the average of my salary is over the time I have worked
I make contributions every month as does my employer as with all pensions I guess.

I’m so confused. Please could someone explain how I could find out what amount my pension might be and how it works?

Your contributions are determined by your pay band. There's further info on the cs pension scheme website, bear in mind that contribution rates do change now and then.

The main difference between public sector pensions and private is that the former are defined benefit and the latter are defined contributions. Defined benefit pensions so guarantee you a set sum each year based on your salary (whether that is final salary or career average). With defined contribution, you and your employer put in a set amount, it's invested and then whatever is there at retirement age is what you get out. You can use that to buy an annuity if you want a fixed sum every year.

www.civilservicepensionscheme.org.uk/members/prospective-members-faq/

Thanks goodbyeeee.

On the link goodbyeeee posted for the Alpha pension, it says that ‘this will be made up of the 2.32% of your pensionable earnings each year, adjusted in line with prices.’

Is it possible to work out from this what the final pension amount will be?

You need to check your guidance on who to contact. For DWP it us shared services who will take a minimum of 3 months to reply. If you are a certain age then the Alpha Pension will be based on final salary however most people fall into the younger bracket in which case it will be your career aversge.

Of course it is. That's what a pension is. Is this really a surprise?

Erm, no. This isn’t necessarily what “a pension is”. Unusual for the yearly amount to be based on starting salary.

It depends on your salary. Once you are in the scheme you are sent an annual statement with a projection of what the yearly/monthly amount will be. As pensions go it's my understanding that the CSP is pretty good (but not as good as it used to be.....).

I have a civil service pension. It is based on final salary and years of service. Pension is 1/80 per year of service upto 40 years - so most I could get would be 50% of final salary. It was non-contrubutory except for 1% paid to widows and orphans fund. As a result of being non-contributory salaries were a bit lower to compensate. I eas only in a few years but get £800 a month.

I definitely recommend you look at the website, tons of info there!

You can't really say what your pension would be until you know your salary, and how many years you would be paying in. But you accrue at 2.32% of your pensionable pay per year worked (at least for now).

Think the pp is correct and it's based on career average and not final salary. I was getting confused with my (very old) NHS pension!

So I'm making a guess here that if you worked there 10 years, and your career average was £20k, then your pension would be 23.2% of £20K, so around £4,600.

Subject to a million plan changes between now and your retirement, of course. But that goes for anywhere.

The current scheme isn't based on final salary any longer.

And it most definitely now involves a contribution.

If you are currently a civil servant then you should be receiving an annual statement giving you a projection. If you aren't getting a statement, call the provider and ask for one

I'm so sorry, OP, I missed that all important word - "starting". I was possibly feeling particularly snarky. My apologies.

Current scheme is average salary

Thanks everyone. I’m still so confused on what ‘career average’ means though! How do they work this out?

For explanation of Career Average, see this booklet: Alpha Scheme Guide - Section 1 - General Information: www.civilservicepensionscheme.org.uk/media/95069/alpha_schemeguides1_colour.pdf

Section 01B: Building Up Your Benefits

Alpha is a Career Average pension scheme. This means you build up alpha pension based on a percentage of how much you earn each scheme year. You build up alpha pension by adding 2.32% of your actual pensionable earnings from each scheme year to your alpha pension.

What earnings are used?
Your actual pensionable earnings are used to work out the 2.32% that is added to your alpha pension. This is the amount you actually get paid (before any tax or National Insurance is deducted).

Most of your earnings will usually be pensionable earnings. They will include any allowances that Cabinet Office has agreed are pensionable. Some bonuses are not pensionable. Your employer will be able to tell you which parts of your pay will be pensionable.

What if I work part-time?
Your actual earnings are used to work out your benefits, so this takes into account the reduced amount you earn.

There is a helpful illustration in section 01B of the link with figures and graphs.