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?

Final salary means you would get a pension based your salary at the time you retire and the number of years you were a member of the scheme. Career average means you would get a pension based on your average salary over the time you were in the scheme and the number of years you were in the scheme. There aren’t (as far as I’m aware) any pensions based on your starting salary.

I have a small Alpha pension which I think is career average. But for me it makes no difference whether it’s career average or final salary because my salary didn’t really go up during the time I was in the scheme.

What you need to know is what your pensionable earnings are for the year. Normally it’s the same as your salary but some types of earnings aren’t pensionable. Once you’ve worked out your pensionable earnings, multiply by 2.32% and that’s how much pension you have accrued in that year.

Thanks, blueshoes. I’m still unsure about how much I’d get per year though and what the final amount would be. Is there any way I could work this out?

Career Average means a slice of your pension pot depends on your salary each and every year.

With final salary it is essentially only your final year and length of service that mattered, not the shape of the changes in your salary over the years to get there.

It means, for example, big promotions just before retirement don't cause a huge boost to pensions any more.

I’m on Alpha so my pension will be based on an average across my career rather than final salary. My pension contributions have doubled while my pay has been frozen then restrained at 1% over the past 10 years. But that’s a whole other story.

I’ve just m put some details into apensions calculator online and it says my pension will be around £8000 per year. Is that right? I’m more and more confused! I’ve heard that public sector pensions are meant to be quite generous.

Depends on what you earn and how many years you'll be working.

Ignoring inflation and payrises, it's £232 per 10k of salary per year worked, so a pension of £8k (34 and a bit * 232) could be nearly 35 years on £10k or 17 years on £20k or 11 and a bit years on £30k or 8 and a bit years on 40k etc.

Dont u have a modeller?

Im an irish cs and i can go to an online tool. U need to know your service to date. Our pensions based on final sal.

Based on starting salary!! There"d be riots!

Is it an alpha pensions calculator? Or just any old pensions calculator. The latter does not work for you. You need an alpha pensions calculator.

Do you still get lump sums

Just ask your HR team for the log in to the online pension portal. You should also be getting annual statements which show projected pension so you don't have to work it out yourself

No lump sum in addition.

One of the documents I found when googling says you can exchange up to 25% of your annual pension for lump sum at the rate of £12 lump for £1 annual given up.

Thanks for info. Im curious how they compare. Anybody who started before 2013 still gets a lump sum as well as pension (based on final sal) here.

OP, I hope you don't mind my saying but it looks like you are mathematically challenged, considering how many posters explained how to calculate your pension based on career average.

Your best bet is to gives us the following details and we can estimate for you, based on assumptions:

• The year you joined
• Your salary for each year after you joined
• Is your salary likely to go up or down.
• Which year is the year you turn, say, 68.

I’ve just m put some details into apensions calculator online and it says my pension will be around £8000 per year. Is that right? I’m more and more confused! I’ve heard that public sector pensions are meant to be quite generous.

Definitions of generous may vary. Given your limited grasp of it all it suggests that you do indeed have a very generous payment on the way like many others

Civil service pensions have definitely got worse over the last decade or so - higher contributions and lower benefits. It's still nice to have defined benefit compared to a lot of pensions out there but nothing like it used to be.

I'm a civil servant and because when I started the condition of my pension was final salary, that is what I'll get when I retire.

New employers have different pension conditions. I have no idea what they are because it doesn't apply to me.

blueshoes your comment about me being ‘mathematically challenged’ was quite rude. It’s neither here nor there. I think pensions can be quite difficult to understand, because of the different rules attached to them. I was asking for friendly advice on here (thanks to everyone who gave me good advice), not to be attacked for my apparent lack of mathematical ability by a total stranger.

Well yes, OP, but as all pension schemes are different you would be better reading the info specific to your scheme and trying to understand it and doing some sums. Asking on here can only ever give you general information when what you need is specific - and you already have it.

To save me looking it up, are CS with a CS pension entitled to the State Pension also? Thanks.

Public sector pensions are not as great as they used to be when they were final salary rather than career average.

Still far better than most if not all DC schemes though!

Different parts of the CS have different pension schemes. We are still have final salary, but other parts who joined us after the bonfire of the quangos are on either average or contributory schemes. They get better holiday provision and Flexi time.

@keyboardkate yes, although if you had a cs pension pre-2016 it might be slightly lower. This will also depend on your age but you will be entitled to some, if not a full state pension

Alpha is roughly worked out as follows:

Year 1: salary is £20,000pa. At the end of the year your pension will be £464 (2.32% of £20,000)

Year 2: salary is £20,000. The £464 from year 1 will be increased by inflation and then the £464 earned in year 2 will be added. Say inflation was 1%. So your pension at the end of year 2 will be £464 increased by 1% plus the £464 earned in year 2 = £932

Year 3: salary increased to £25,000. So pension earned in year 3 is £580. If inflation was 1% then the £932 would be increased to £941 then the £580 would be added on to make £1582.

If you left after year 3 then when you reach retirement the civil service pension will pay you £1582 a year (although this amount is subject to inflation so could be higher by the time you get to retirement age)

If you carried on working then your pension will carry on being built up as above until you leave or retire.

So, it's not easy to work out your pension in retirement as you do not know what inflation is, what your salary will be or how long you will be a member of the scheme for.

With regards to pension contributions, you will pay whatever the scheme requires you to. Your employer will contribute however much they need to to make sure the scheme can pay what they have promised to pay you.

With traditional final salary schemes the calculation is much simpler. It is your salary when you leave the scheme x how long you were in the scheme which is then divided by a factor (generally 60 or 80). So, final salary benefits tend to be more favourable (and more expensive to run) than career average as a persons final salary tends to be higher at the end of service.

Contact the pensions department ad ask for a personal pension forecast. That will help.

Given how hard it is to get a pay rise in the Civil Service these days, starting and final salaries, and career averages, could indeed be more or less the same.

OP, you need to look at the information available for your particular pension, and ask them for help with it, as there is more than one CS pension and rules/benefits are very different, depending on when you joined and how old you are.

Civil Service pensions are far less generous than they used to be, but the likes of the Daily Mail are probably still banging on about 'lazy civil servants wasting tax payers money pushing pointless pieces of paper around while they wait until they are entitled to their early retirement gold plated civil service pension to kick in'. But you do get a decent employer's contribution as well as your own and tax relief, so it's still likely to be worth having (not investment advice, ask your provider or union for illustrations etc).

@ReasonableLlama

Thank you.