The PCS Pension Calculator for Alpha, the new PCSPS
The PCS calculator provides an estimate of your future pension – that is the pension you will build up for your membership of the Principal Civil Service Pension Scheme (PCSPS) from 1 April, 2015 onwards.
This date is when the new Alpha section starts for most active members. It does not apply to those members of the existing arrangements whose status is ‘protected’ and, hence, are unable to join Alpha. Nor does it apply to members of the ‘partnership’ section, whose benefits are on a defined contribution basis.
The calculator provides a comparison of the old and new benefits, i.e. before and after the change, as follows:
- First, there is the pension you would have built up, had the changes not been made and, hence, you would have remained in the section of the PCSPS to which you belonged prior to 1 April 2015, i.e. Classic, Classic Plus, Premium or nuvos; and
- Secondly, there is the pension which you will now build up as a member of the new section, i.e. Alpha. For the limited group of older members who have 2 options about when they join Alpha, the calculator provides 2 figures.
The difference between the old and new figures is the reduction or, in some circumstances, the increase in your future pension that has been brought about by the change to Alpha for your future service.
The calculator does not deal with the pension you have already built up in the PCSPS prior to 1 April, 2015. My CSP will be providing members with a statement of those benefits in the normal way and these will be unaffected by the introduction of Alpha.
The calculator focuses on what will happen in the future
The estimate of your future pension is expressed as a percentage of your pay at your chosen retirement age. Of course, we don’t know what your pay will be at retirement, but to provide an idea of what this percentage means in real terms, it is applied to your current annual pay.
For members of the Classic section it is assumed, for the purposes of making a comparison on a like-for-like basis, that they will commute part of their Alpha pension to provide the same lump sum as that they would have received had they remained in the Classic section. The remaining pension from Alpha is then compared to the pension that would have been payable by the Classic section.
For members of the other sections the comparison is made of the pension that will accrue before any is commuted.
The calculator requires you to provide the following information about your individual circumstances:
- Your date of birth;
- Your current section of the PCSPS (i.e. Classic, Classic Plus, Premium or nuvos);
- Your current annual pensionable earnings (The full-time equivalent for current part-timers);
- The age at which you expect to take your PCSPS pension (This can be changed and the calculator allows you to choose any exact age from 60 to 70);
- An estimate, if applicable, of an expected period of part-time work (Only one period is allowed which will have to be an exact number of years.);
- Your estimate of future pay increases expressed in relation to increases in the Consumer Price Index. See below for more details.
The calculator is intended only for illustrative purposes and to provide a broad brush indication of the impact of the introduction of Alpha on your potential pension benefits for your future membership of the PCSPS. It should not be relied upon on its own for any decisions you might make about your future pension provision. You must consider whether you need any independent financial advice if you are considering any change in your pension arrangements.
The PCSPS is complex and it is inevitable that this calculator cannot cover every possible contingency. Some simplifications have had to be made and, hence, it should not be relied upon to provide an exact forecast of your future pension. It is intended to provide just a broad idea of what impact the introduction of Alpha will have on your future benefits.
In addition, the calculator does not take account of the impact on your pension of any of the following factors:
- What happens if you become an early leaver, i.e. you leave the scheme prior to the age at which you expect to take your pension;
- The special conditions that apply to a part of your pension, known as the Guaranteed Minimum Pensions (GMPs), to which you are entitled for membership of the PCSPS prior to 1997;
- Any entitlement based on payment of additional voluntary contributions (AVCs);
- Pensions sharing arrangements that may have been agreed if you are divorced;
- Any entitlement to non-standard benefits for particular groups of members;
- Changes in the actuarial factors that are applied on early and, in certain circumstances, late retirement;
- The impact on your benefits of the Annual Allowance or Lifetime Allowance limits.
Future Pay Increases
The results produced by the calculator depend to a large extent on your future pay increases, both in terms of your individual career progression and pay increases more generally. It also depends on future rates of inflation. The calculator assumes that there are 2 components to future pay increases, as follows:
- First, increases in line with your age, where it is assumed that these reflect the experience of the majority of civil servants; and
- Secondly, general increases in pay, compared to the Consumer Prices Index (CPI). The standard assumption by the scheme actuary where the standard assumption is that these will exceed the CPI by 3% per annum.
It must be stressed that these assumptions do not constitute a forecast by PCS. They are adopted simply to provide some consistency with the assumptions made by the scheme actuary for the most recent valuation of the PCSPS.
If you think that the standard assumptions are not appropriate, because you expect your own pay or pay more generally to go up either more or less than the standard assumptions, the calculator allows you to change the assumption. The calculator allows a range of assumptions between CPI and CPI plus 6%, with 1% steps. For example, if you expect to be promoted significantly over the period up to retirement you might use a higher assumption about future pay increases.