If you have any problems with this page you can download a PDF version of the questions and answers.
The information that follows tells you why the contributions have increased and answers some of the questions you may have.
|Annual pensionable earnings (full-time equivalent basis)||Current contribution rate for classic, as a percent of pensionable earnings||Contribution rate for classic from 1 April 2012, as a percent of pensionable earnings|
|Up to £15,000pa||1.5%||1.5%|
|£15,001 ‐ £21,000||1.5%||2.1%|
|£21,001 ‐ £30,000||1.5%||2.7%|
|£30,001 ‐ £50,000||1.5%||3.1%|
|£50,001 ‐ £60,000||1.5%||3.5%|
Members of premium, classic plus and nuvos will pay contributions at these rates:
|Annual pensionable earnings (full-time equivalent basis)||Current contribution rate for premium, nuvos and classic plus, as a percent of pensionable earnings||Contribution rate for premium, nuvos and classic plus from 1 April 2012, as a percent of pensionable earnings|
|Up to £15,000pa||3.5%||3.5%|
|£15,001 ‐ £21,000||3.5%||4.1%|
|£21,001 ‐ £30,000||3.5%||4.7%|
|£30,001 ‐ £50,000||3.5%||5.1%|
|£50,001 ‐ £60,000||3.5%||5.5%|
You can find a calculator which will give you an indication of what your take home pay will be from April 2012 at http://www.civilservice.gov.uk/pensions/reform/contribution-increases
Jane earns £25,000 a year and is in classic. Jane’s contributions currently cost her £25 per month after tax. Following the change in April 2012 Jane’s contributions will cost her £20 per month more after tax.
Hayley earns £16,000 a year and is in nuvos. Hayley’s contributions currently cost her just over £37 per month after tax. Following the change April 2012, Hayley’s contributions will cost her just under an additional £7 per month after tax.
Use the calculator to find out what this change means for you.
Jen works part time, is in the nuvos scheme and earns £12000 but her full time equivalent salary is £16000 and therefore will pay increased contributions of 0.6%
Jane earns £25,000 a year and is in classic. Jane’s contributions currently cost her £25 per month after tax (£31.25 before tax). Following the change in April 2012 Jane’s contributions will cost her £20 per month more after tax (£25 per month before tax).
Hayley earns £16,000 a year and is in nuvos. Hayley’s contributions currently cost her just over £37 per month after tax (almost £47 per month before tax). Following the change April 2012, Hayley’s contributions will cost her just under an additional £7 per month after tax (£8 extra before tax).
The consultation can be found at – http://www.civilservice.gov.uk/pensions/reform/contribution-increases
Please think carefully before making your decision and consider taking independent
financial advice to help you make an informed choice
You can choose to stop buying added years. You are able to do this by contacting your Pension Service Centre. Before stopping your added years contributions you should take account of the fact that once you have cancelled your added years contributions you cannot restart them in the future (although you would be able to buy added pension).
The contributions paid by members of premium, classic plus and nuvos are not refunded once the person has qualified for pension benefits.
|Full‐time pay range||Employer contribution|
|Up to £21,000||16.7%|
|£21,001 ‐ £43,500||18.8%|
|£43,501 ‐ £74,500||21.8%|
|Pre‐Fresh Start prison officers||25.8%|
The average rate of employer contribution is 18.9% of pay. There are no plans to change the rate of employer contributions at this time.
Contribution structures in 2013-14 and 2014-15, before the new scheme is introduced, will be discussed by Cabinet Office and unions in the light of experience of opt-outs, other member behaviour and changing circumstances, and will reflect the Government’s and unions’ shared priorities for those structures to:
- include protections for the low paid,
- take account of the tax regime applicable at that time,
- minimise the risk of opt-outs from the scheme across the whole membership; and
- ensure that the scheme remains sustainable,
- You are promoted or permanently move to a lower grade;
- You move to a role where you will be paid permanent pensionable allowances;
- You are temporarily promoted or paid a pensionable allowance for higher responsibilities for over 6 months;
You move back to your substantive grade or role after 6 months.
- You move back to your substantive grade or role after 6 months.
Any annual pay increase will not trigger a reassessment of your contribution rate until the end of the current financial year.
Lord Hutton said “cap and share cannot take account of the increases in cost of pensions over recent decades because people have been living longer. Also, untested, complex cap and share arrangements cannot of themselves address the underlying issue of structural reforms, nor significantly reduce current costs to taxpayers”.
If the civil service were to apply the NHS employee contributions increase model, it would not raise the necessary level of contributions required. To raise the level required would require either:
- an across the board increases of around 2.4% for all those above the protections; or
- push higher earners contributions significantly above the 2.4% of pay increase limit set for the 2012-13 contribution increase.
Premium was introduced in October 2002. The employee contribution rate of 3.5% of pay reflected the fact that the benefits were more costly than those of classic (the member’s pension is higher and the death benefits are better). All members of classic were given the option to move into premium if they wished (or to opt for a hybrid arrangement – classic plus – which provided classic benefits for the period before October 2002 and premium benefits for the future. Most members opted to remain in classic, but a sizeable minority switched to premium or classic plus.
The nuvos arrangements were introduced from 30 July 2007 as part of the reforms following the Public Services Forum agreement of 2005. The nuvos benefit structure was designed to reflect the agreed cost envelope and a 3.5% member contribution – the same as premium. We did consider setting the member contribution at a different rate, but this would have had a direct effect on the benefits offered by nuvos. Nuvos is not an inferior scheme. For many members who do not enjoy a series of promotions during their Civil Service career, nuvos is likely to produce retirement outcomes broadly as good as the final salary schemes available to staff who joined before 2007.
The Civil Service website has been updated to cover points raised in the letters that have been returned. The Cabinet Office will not be providing individual replies.
In November, the Government consulted key stakeholders on Ministers’ pensions setting out a proposed increase of contributions. On 15 March the Government announced its plans to increase Ministerial contributions. This means that Ministers and Whips will be paying up to 13% of pay in contributions from April 2012, while Cabinet Ministers could be paying over 14% of pay. This change will make their contributions among the highest in the public sector.