Adviser > Technical Central > Pre simplification > Occupational > Civil Service Pensions - Premium Scheme
Civil Service Pensions - Premium Scheme
The content of this page is based on our understanding of how pensions worked before A-Day, the 6 April 2006, and is provided for reference only.
Historically civil servants had access to the Principal Civil Service Pension Scheme (PCSPS). From 1 October 2002 four pension schemes were made available: namely Classic, Classic Plus, Premium and Partnership. The four schemes offer different types of benefits.
Civil Service Pensions - Classic Scheme - This scheme is final salary and is closed to new entrants. Civil servants who were members of the PCSPS prior to 1 October 2002 who decided not to join any of the other civil service pension schemes are automatically members of this scheme.
Civil Service Pensions - Classic Plus Scheme - A final salary scheme closed to new entrants. Members are employees who were members of the PCSPS on 30 September 2002 who decided to join this scheme. It is a combination of Classic benefits for service up to 30 September 2002 and the equivalent of Premium benefits from 1 October 2002.
Premium - Final salary scheme open to employees who were members of the PCSPS on 30 September 2002 and chose to join this scheme with effect from 1 October 2002. This scheme is open to new entrants.
Civil Service Pensions - Partnership Pension Account. - A stakeholder pension scheme open to all employees who are not members of one of the other schemes.
This overview outlines the features of the Premium scheme. Overviews of the other schemes are available by clicking on their names above.
All the Civil Service Schemes are being reviewed by the Government. They plan to move from a final-salary scheme to a whole career scheme and also want to alter the pension age from 60 to 65. The consultation ended on 4 March 2005, however no decision has yet been reached.
Administrator & website address
To find out who the administrator is, look up the Helpline on the Civil Service Pensions Website
Look up the organisation the member works for e.g. Home Office. An alphabetical list is provided on the Helpline page of the website
Contracted-out
Yes
Contribution basis
AVC scheme available - Yes
Member contribution - 3.5% p.a. of pensionable earnings
Employer contribution - The level set by the scheme actuary to enable full benefits to be paid
Added years permitted? - Yes. Additional contributions are collected through monthly salary deduction, or AVCs can be paid
Salary definition
Pensionable earnings - Permanent items of pay are pensionable. This may include non-cash earnings, e.g. uniform allowance (Bonus may be pensionable at the discretion of the employer)
Final pensionable earnings - The higher of:
- The last 12 months pensionable earnings (not including bonuses)
- The highest pensionable earnings (not including bonuses) in any of the last 4 full tax years
- The highest average pensionable earnings including any pensionable bonuses (based on 3 tax years in a row and may take into account salaries for the last 13 years)
Pensionable/reckonable service - If the employee was a member of PCSPS on 30 September 2002 and joined the Premium Pension Scheme from 1 October 2002, then reckonable service in the PCSPS will be converted to Premium reckonable service. In most cases the conversion rate will have been 0.92 years of Premium reckonable service for every year in the PCSPS. (In certain circumstances the member may get slightly less)
Normal retirement benefits
Normal retirement age - 60
Pension - 1/60th of final pensionable earnings for each year of reckonable service
Lump sum - 2.25 x pension before commutation
Early retirement on the grounds of ill-health
If the member cannot work because of permanent ill-health and has 2 or more years service, an ill-health early retirement pension may be paid (subject to agreement from the company medical adviser and completion of a satisfactory health declaration)
No actuarial reduction is applied to the pension. If the member has very short service or is in severe ill-health then added years may be granted
Early retirement
Members can take early retirement from age 50, the typical early retirement factor is 5% for each year the pension is taken early
Different types of early retirement benefits are also provided under the Civil Service Compensation Scheme. They are:
- Compulsory early severance
- Flexible early severance
- Approved early retirement
- Compulsory early retirement
- Early retirement with actuarially reduced benefits
- Flexible early retirement
Late retirement
If allowed by the employer
Commutation factors
12:1
Pension increases
In line with RPI - paid to pensioners age 55 or over
Death before retirement benefits
Death in service
Lump Sum - 3 times pensionable earnings
(Lump sum may be increased up to 4 times salary if AVCs are paid by the member)
Dependants' benefits:
- 3/8ths of member’s pension (a higher amount may be paid)
- Children's pensions (if payable)
Death after leaving service
Lump sum - If member dies within 5 years of starting to receive their pension, then the balance of the 5 years pension will be payable
Dependants' benefits:
- The spouse will usually receive 3/8ths of member's pension
- Children's pensions (if payable)
Widow's/widower's/partner's benefits - If the spouse gets married again or cohabits, the pension will either stop or be reduced
If the member is not married to anyone, a pension may be paid to the partner. This pension will only be based on service from 1/10/02
Death after retirement benefits
Lump sum - If member dies within 5 years of starting to receive their pension, a lump sum representing the balance of 5 years pension will be payable as a lump sum
Dependants' benefits
- 3/8ths of member's pension
- children’s pension (if payable)
Early leaver options
Transfer value - A transfer value is available, even if the member has less than 2 years service
Preserved pension - If the member has 2 or more years service then they can elect to make their benefit paid up. This pension will become payable from age 60
Refund of contributions - If the member has less than 2 years service, then a refund of member’s contributions will normally be paid
Treatment of pension rights on divorce
Earmarking - The court can order the scheme to pay all or part of the pension and lump sum. The scheme will only make payments to the former spouse when a court order has specifically instructed them to do so. If the former spouse remarries, he or she will not receive payments in respect of the pension after date of remarriage, however this normally does not affect the lump sum which has been earmarked
Pension sharing on divorce - The accrued pension rights are reduced by a percentage confirmed by the court. The former spouse is given rights in the scheme equal in value to the amount of reduction – known as the pension credit rights. There is no option to transfer the pension credit rights out of the scheme.
Any research and analysis included has been provided by us for our own purposes and the results of it are being made available only incidentally.
Updated 5 August 2005
For professional advisers only
