Public Servant Lifestyle

Pension schemes for civil servants are to take on a new look.

From October, the current pension scheme for civil servants - called the Principal Civil Service Pension Scheme (PCSPS) - will be renamed 'Classic'.

Employees that are existing members of PCSPS will choose one of three pension schemes:

1. Classic

- The current PCSPS, renamed. Civil servants making this choice will carry on, with no change to their pension arrangements.

2. Premium

- The new scheme, designed for new entrants, from 1 October, but also available to current members of the PCSPS. Civil servants choosing premium will convert their existing service, in PCSPS, into new scheme service.

3. Classic plus

- A combined approach, with service from 1 October counting as premium service, and with service up to 30 September continuing to be pensioned on the same basis as at present, in PCSPS (subject to some minor changes).

New entrants starting on, or after, 1 October, will choose between:

1. Premium pension scheme - A pension based on years of service, and final pensionable earnings, with a member contribution rate of 3.5% of earnings.

2. Partnership pension account - A personal pension, on the Stakeholder pension model, with an employer contribution based on member age. On top of this, the employer will match member contributions £ for £, up to 3% of pay.

The current Civil Service pension scheme:

- Pays a pension, usually at age 60, based on years of service, and on employees' salary in their last years of work.

- Gives a tax-free lump sum, on retirement, of three times the person's pension.

- Increases the person's pension every year, in line with the retail prices index.

- Provides a lump sum benefit for dependants, if edmployees die in service.

- Provides, on death, a pension for employees' widow, or widower and dependent children.

- Provides an ill health pension if employees have to retire early for medical reasons.

Civil servants choose whether or not they want to join the scheme, and pay contributions of 1.5% of their pensionable earnings. Employees receive tax relief on their contributions, as they are taken from pay before tax is worked out.

The current Civil Service scheme pays a pension based on 1/80 of salary for every year of service, plus a lump sum based on 3/80.

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