The pension age for most members of nuvos is 65. This is the earliest that you can usually take your pension without it being reduced for early payment. You can apply to draw your pension at any time from the age of 55 but because your pension will be paid for more years, it will be reduced if you take it before pension age (see question 61). It will be increased if you draw it after pension age.
You will only be able to have a nuvos pension if you meet the qualifying conditions in the scheme rules. As a general rule, this means that you have to work for a Civil Service Pensions employer for a minimum of two years. Any service you have transferred in from an occupational pension scheme (see question 38-40) counts towards the two year requirement.
If you have transferred a personal pension into nuvos, or if you leave at or after pension age, there is no minimum (“qualifying”) period needed before you are entitled to a nuvos pension.
See the section on Leaving before pension age (questions 59-65) for more information about leaving early.
Your pension will build up each year whilst you are a scheme member. Each scheme year (1 April to 31 March) your pension will build up at the rate of 2.3% of your pensionable earnings. (Note that this rate could be changed in the future, but no changes will happen without full consultation with the Civil Service unions.) From 1 April 2014 your pensionable earnings are the pensionable pay you earn during the scheme year. Prior to this, we used the pensionable pay that you received during the scheme year, irrespective of when you earned that pay.
The Scheme Administrator (MyCSP) will calculate the balance of your nuvos pension every March, and then increase it in April. This increase reflects the rises in the cost of living. This increase applies every year, whether you are in service, have left with a preserved pension, or your pension is in payment.
Simon joined the scheme on 1st April, on pensionable pay of £17,750. His pensionable pay went up to £18,250 on 1st October, so his pensionable earnings in his first year were £18,000. He earns £414 (2.3% of £18,000) of pension. The following October his pensionable pay went up to £18,500, so his pensionable earnings in his second year were £18,375. In that year he earns pension of £422.63. The pension earned in the previous year has been increased by 2.5% in line with rises in the cost of living, so by the end of year 2 he has earned a total of £846.98 of annual pension. Each year he continues as a nuvos member he will build up further pension this way.
You will earn pension that year based on the pensionable earnings you actually earn.
Sophia has pensionable pay of £24,000. As at 31st March she had earned nuvos pension of £7,500. Sophia leaves on the 31st July. In the four months from April to July her pensionable earnings are £8,000, so she will be credited with a further £184 of nuvos pension (2.3% of £8,000), bringing her total entitlement to £7,684 of annual pension.
From 1 April 2014 , any adjustment to your pay will be reflected in your pension earned in the year the pay was due, not the year it was actually received.
Alan receives arrears of pay in May, from a pay settlement backdated to the previous 1 January.
His nuvos pension for the previous year ending 31 March, will be increased to reflect his higher rate of pay from 1 January.
There is a limit, but it is unlikely to affect you unless you have very long service. Your pension (excluding any added pension that you have bought) cannot be more than 75% of your highest scheme earnings. For this purpose, highest scheme earnings will be the highest of:
or
In order to make this comparison, your pensionable earnings from previous years will be increased in line with rises in the cost of living.
Any pension you already have from the Civil Service pension arrangements will also count against the 75% limit (see question 45).
a. Fred’s earnings dropped as he approached retirement because he stopped doing shift working. His final year’s pensionable earnings were £24,000. But two years earlier, his pensionable earnings had been £30,000. So Fred’s pension cannot be more than 75% of £31,518 (£30,000 uprated by inflation of 2.5% a year), i.e. £23,639 a year.
At the time you draw your pension you can choose to give up part of your pension for a tax-free lump sum. This is called “commuting” pension for lump sum and is subject to limits set by HMRC.
Your pension will be reduced by £1 a year for every £12 you take as a lump sum.
You can find a calculator here:
This shows the maximum lump sum for a given amount of pension and the effect that taking a lump sum would have on your remaining pension.
You can find out how much lump sum you can take, and the effect it will have on your pension by using the calculator here: Pension Calculators
a. Jane retires with a pension of £10,000 a year. She decides to take a lump sum of £36,000. So her pension will be reduced by £3,000 a year (£36,000/12), giving her a pension of £7,000 a year.
b. Tom retires with a pension of £18,000 a year. He uses the online calculator to work out that he could take £77,143 as tax free cash, (£18,000 x 30/7), but if he does, his pension will be reduced to £11,571 a year (£18,000 - £77,143/12).
Your pension will build up exactly the same way, based on your pensionable earnings each year.
Marjorie has worked 20 years full time but decides to change to part time working. She had built up nuvos pension of £9,000. In her last year of full time working her pensionable earnings were £42,000 so her pension earned that year was £966. In her first year of part time working her pensionable earnings were £30,000 so her pension earned that year was £690. Her pension earned in previous years would continue to go up each year in line with rises in the cost of living, just as it did when she was working full time.
You can usually only pay contributions and build up pension in the scheme if you are actually working or if you are on paid leave. If you are on unpaid leave of any sort, then you will generally not receive pensionable earnings for that period. However, there are some exceptions.
If you are on certain types of maternity, paternity or adoption leave on reduced pay or no pay, you will only pay contributions based on the pay you are actually receiving, but you will build up nuvos pension as if your pensionable earnings were at the usual level.
If you are on paid sick leave, you will build up nuvos pension as usual. If your pay reduces to half rate, you will still build up pension as if your pensionable earnings were at the full rate.
However, sick pay at pension rate does not count as pensionable earnings.
If you are on a career break, or any other form of special unpaid leave, you will not build up any nuvos pension during that period, but you would count as being “in service” if you were to die (see questions 46 and 49).
a. Brendan is on long-term sick leave after a car accident. He is on full pay until June, at his normal earnings of £36,000. Then he goes onto half pay until December, but he is on unpaid sick leave from January to March. His pensionable earnings that year will be counted as £27,000, i.e. 9 months at £36,000.
b. Janet is on contractual maternity leave until July, then starts a career break. She will build up nuvos pension that year based on her normal pensionable earnings from April to July. The nuvos pension she has built up will continue to increase each year in line with the rises in the cost of living while she is on her career break.
Each year the Scheme administrator (MyCSP) will send you an Annual Benefit Statement (ABS).
ABSs provide members with a summary of their Civil Service pension benefits, up to the date of the statement each year.
When you tell your employer that you are planning to retire and take your pension, the Scheme Administrator (MyCSP) will send you a statement of the benefits payable to you.
You will receive an annual pension and, if you choose to take one, a one-off lump sum. Your lump sum will be paid direct to your bank or building society account.
Your pension will be paid every month, in arrears, directly into your bank or building society account. Your pension will be treated as earned income for tax purposes; any tax that is due is taken off before the pension is paid.
Pensions in payment may increase every year in line with the cost of living. All pensioners aged 55 or over get these increases. Preserved benefits are also increased up to the date they become payable.
You will also receive the ‘cost of living’ increases if you are under 55 and if you are retired because of ill health.
Cost of living increases are also added if: