Can someone explain civil service pensions please?

[Beautifulpeartree]

Trying to decide if I should apply for a civil service job or not. I have always worked on private sector and have a private DC pension.

I am early 50 and planning to retire in 5 or 7 years with D; ge is 8 years older than me.

When can you claim civil service pension? Is it worth it starting this late in life? Or is it better to continue in private sector with a higher salary so I can contribute more.? The work life balance is what appeals to me reg civil service jobs plus doing something different, contribute to society somehow.

Civil Service pension is a defined benefit scheme. The normal pension age is linked to your state pension age - I assume 67 or 68 for you. You can take your pension early but it will be reduced.

For each tax year you accrue 2.32% of your pensionable earnings. So if your pensionable earnings are £35,000 for each year you accrue £812 pension. If your salary stayed the same for 10 years you get a pension of £8,120 per year. If you earn more then you accrue a higher pension e.g. £50,000 = £1,160 per year.

Once you start drawing your pension it is index linked, meaning each April it increases usually by September CPI.

It is a good pension scheme but 8 years is not long to accrue a pension.

Thank you. That is what I thought; it is good if you start earlier; I also don’t want to wait until 67 to retire. I think It makes more sense to stick to private sector with a higher salary to stick more into private pension so I can retire earlier .

You don't have to wait until 67 to retire - that's just the age when you will be paid your state pension/your CS pension. If you can fund it yourself, you can retire from age 55/57.

Thank you. I know you can retire any age as long as you have the money; but most of us are relaying on the pension and I understand the CS pension is not paid until 67 or earlier but you won’t get much.

The one big difference is that if you are forced to retire on ill health grounds you get a full pension from that point. But I do find retiring in your 50s is a real luxury nowadays. I have several (highish earning) friends who are still working at least a bit in their 70s.

You don't have to join the CS DBS pension. If you are close to retirement, the CS can pay into a DCS scheme for you. All the info is here:

https://www.civilservicepensionscheme.org.uk/joining-the-pension-scheme/alpha-or-partnership/

Alpha is the DBS scheme.
Partnership is the DCS scheme.

Thank you. This is very useful

Do you know if this is similar for the local authorities jobs?

Also will the CS contribute the same amount for DCS?

Im sorry, I don't know. Im in the DBS scheme so I don't have a lot of knowledge about the DCS scheme other than it exists!

Local authorities have their own scheme - they don't use the civil service scheme. https://www.lgpsmember.org/

https://www.civilservicepensionscheme.org.uk/knowledge-centre/pension-schemes/partnership-pension-account/

According to this it’s 14.75%.

In reality, you will struggle to accumulate an equivalent amount of pension in a DC arrangement in 8 years to what you'd get in the civil service scheme. The value of the defined benefit scheme should not be underestimated. You can find lots of information about the scheme and your employee contribution rates on their website.

Thank you. I think it depends on the salary, I was contributing 36 % in previous job and company 9%. I was able to do this as salary was high. Local Authorities salary as not as high, CS depends on the role.

if you retire early, can’t you cover the years until the CS pension kicks in with the DC savings you already have, then rely on them less once the CS pension starts up? Also there’s nothing to stop you contributing to another private pension in addition to the CS one (within the tax limits if your figures are getting high), which you can then draw down from a younger age.

Thank you. Maybe that is an option, but I only have 140k so far. I think it may be better to get the CS to contribute to the private one if retiring early.

Also not all parts of the CS use the CS pension scheme. Many of the delivery agencies have their own.

@Beautifulpeartree If you pension pot is £140k then a Civil Service DB pension would be a great addition.

Let me be blunt, £140k is £10k a year for 14 years an index linked CS DB pension of £8k is paid for life but also increases with CPI. You cannot underestimate how much it would cost to buy the equivalent of a CS index linked DB pension (not partnership).

Honestly if you can get a CS job join the DB scheme and also continue to save in your personal pension you won’t regret it. Remember CS is flexible so you could in 5-7 years time look at going part time e.g. 4 days for 2 years then 3 days etc.

ccrue £812 pension. If your salary stayed the same for 10 years you get a pension of £8,120 per year.

Really? You save up £8,120 into your fund - then it’s paid out at £8,120 a Year til you die?

Thank you. I think you are right. Salary in a role I saw is £70,000, that will mean a pension of around £1,600 per month if I stay 10 years plus my DC pension. I need to get the job first though 😅

There are quite a few finance roles. I am getting more excited about the idea. I need to get my head around their process.

www.civilservicejobs.service.gov.uk/csr/index.cgi?SID=cGFnZWNsYXNzPVNlYXJjaCZjb250ZXh0aWQ9MTUwNDkxMDAyJm93bmVyPTUwNzAwMDAmcGFnZWFjdGlvbj1zZWFyY2hjb250ZXh0Jm93bmVydHlwZT1mYWlyJnJlcXNpZz0xNzU3NTcwNTg1LTRjMmQwZmYwY2I2OTgyYWU4ZDI5OTUxNjkxMmQ2NzEyY2Q5ZTlmZDc=

I applied for a civil service job, my salary at the time was £120k and the job was c £80k - at my age the drop in salary was just about made up by the value of the CS pension (the older you are, the more valuable it is) - I was 45 at the time. I didn’t get the job unfortunately.

Whatever type of scheme you have, the earlier you retire the lower your pension will be as it will need to be paid for longer - people often think that the early retirement reduction for defined benefit schemes is “unfair” but all it does is allocate the amount of pension you have accrued over more years of (expected) payment. A personal pension pot will also need to stretch further the earlier you retire (or you will simply run out of money).

£140k is not a big pot if you want to retire that soon (especially if your salary is high so you have an expectation of a certain standard of living). Does your DH have more saved, or do you have other sources of income?

Yes, DH has more and we also have other sources of income. I was thinking that If I get a good salary and contribute a high percentage for the next 5 to 7 years that will add up.

How was the process for the job you applied? I imagine us very competitive.

The job interview was my idea of hell - lots of competency based questions that I am awful at even when I prepare - my mind just goes blank. If you’re good at that sort of thing then it should be ok!

Hmm. I guess I will need to prepare. Just trying to get my mind around all the job hunting process; it is not as simple when you reached 50. Trying to get myself motivated after burnout at big 4. I thought I was going to stay until retirement as I was dreading job hunting and having to prove myself again. It is easier in your 20s and 30s.

The civil service has quite particularly recruitment- you need to learn to tick their boxes, their way- there are lots of CS people on Mumsnet, and threads on how to navigate the process. Expect for it to take a few goes while you get the hang of it, however fab a candidate you are!