Notes on Current
Civil Service Pensions

Andy Lord, Branch Secretary

With much emphasis on Pensions the Branch believes it would be useful if we summarised the current schemes that are in in use within the central civil service and which members working in this branch will be part of.

This is a simple guide, for detail go to http://www.civilservice.gov.uk/pensions/scheme-guides

Health warning: This is a very basic guide to civil service pensions and should not be used to base decisions on  , nor does it detail the proposals for any revised Pension schemes as currently being discussed between Unions and employers across the Civil Service. .

Most current civil servants are in the main Principal Civil Service Pension Scheme. It has various parts. It is an unfunded, pay as you go scheme so has no investments or trustees. The unions negotiate changes and there is a scheme governance board which has union representation.

Those who joined before 2002 will be in the classic pension scheme (currently 58% of civil servants). A very small proportion will be in classic plus (3%) where they opted to pay more from 2002 to get a better pension.  Premium scheme members are in general those who joined between 2002 and 2007 (25% of civil servants). Those who joined since 2007 to date are in nuvos (currently 14% of civil servants). These are all defined benefit schemes which means whatever is paid in there is a guaranteed outcome. The benefit is defined not how much is contributed.

Partnership is the civil service defined contribution scheme, where a set amount is paid into a money purchase scheme and the outcome/pension is variable depending on investment returns. This should not be affected by the changes to civil service main pensions. This note also excludes previous temporary service and other detail.

Premium pension
This is also a final salary scheme. In this scheme there is no automatic lump sum but pension benefits accrue at a formula of 1/60ths of final pensionable earnings and length of reckonable service. This has an employee cost of 3.5%. Members are offered a choice of a pension based on that formula or conversion to a lump sum and lower pension. Another benefit in this scheme classic doesn’t have is partner benefits for non married couples. Pension age is 60 years old.

Classic pension scheme
This is a basic final salary scheme. Members start accruing (building up) reckonable service when they start work. Full time staff build up day for day service and their pension will be based upon full time pensionable earnings in the best 12 months of the last 3 years, and how long they have worked.

Part-time staff  build up pension on fulltime earnings but service is reduced based on hours worked. So working half time for a year would accrue 6 months pension at full pay. This also applies to Premium and classic plus. This means contributions have to be paid at full time rate of pay as the benefits are built up and paid on full time earnings.

The accrual rate is 80ths so they get the final salary figure as above divided by 80 x years, months and days of service as their pension, with a lump sum of 3 times that amount. They contribute 1.5% of salary. Pension age is 60 years old.

Those unmarried on retirement get most of the 1.5% back because it was specifically a widows/widowers contribution.

In classic plus, service before 2002 is built up like this and the service after this date is based on Premium.

Nuvos
This is a defined benefit whole career scheme similar to that the government want to bring in across the public sector. However, nuvos is a particularly good career average scheme building up benefits at 1/43rds of salary. In nuvos members pay in 3.5% contributions. Pension Age is 65 years old. There are partner benefits.

Unlike the other schemes final salary is not the determiner of the value of the pension but each year 2.3% (1/43rds)of pensionable earnings is put into the members pension pot, interest is added year on year (this was RPI but is now CPI).

The final amount of this pot is the pension, it can be reduced and the member takes a lump sum if they choose.

If you have any questions on the above please do not hesitate to contact me