Leaving or opting out – what happens to your pension benefits?

If you leave voluntarily or opt out of classic before you retire and have at least two years’ qualifying service, you will have the choice to:

  • transfer the value of your classic pension benefits to another pension scheme; or
  • preserve the benefits you have built up within classic for payment at when you retire.

Transferring your classic pension rights

You can ask for a transfer payment to be made to another defined benefit scheme. The transfer payment will be equal to the cash value of your benefits.

You will need to consider the following issues before making a transfer.

  • There may be a time limit in the receiving scheme’s rules (for example, if it is a member of the Public Sector Transfer Club, the time limit is 12 months from the date the member first became eligible to join the new employer’s pension scheme).
  • The transfer value may not necessarily buy the same length of service or amount of pension in the new scheme – you should receive an estimate from the new scheme of how much your classic benefits will buy before you make your decision.
  • The range and type of benefits offered may be different and perhaps less appropriate for your needs.
  • You must apply for the transfer before we start paying your pension benefits.

Preserved benefits within classic

If you do not transfer your benefits out of classic and you are entitled to preserve them, your benefits will normally be paid to you at the scheme pension age. You can, however, take your preserved benefits before scheme pension age if:

  • you are age 50 (55 in some cases) or over and you apply for immediate payment of your preserved benefits on an actuarially reduced basis
  • you suffer from poor health and would have been eligible for medical retirement had you still been working
  • you are age 50 (55 in some cases) or over and cannot work due to compelling personal reasons and you also do not have enough money to live on.

Actuarially-reduced early retirement

Most classic members who are aged 50 (55 in some cases) or over can choose to retire and take their pension early on an actuarially-reduced basis. The only restrictions are that:

  • you must have two years’ qualifying service or have transferred pension rights into classic from a personal pension; and
  • you cannot have an actuarially–reduced pension if it would be less than the amount needed to pay your guaranteed minimum pension at State pension age.

We work out your pension and lump sum in the same way as if you were to retire on or after scheme pension age but reduce payments, permanently, in line with guidelines set by the scheme actuary to reflect the longer period of payment.

Redundancy and early retirement

The CSP arrangements provide compensation under the Civil Service Compensation Scheme for civil servants who leave early because of:

  • voluntary exit
  • voluntary redundancy
  • compulsory redundancy

Ill health retirement

If the classic Scheme Medical Adviser (SMA) confirms that your ill health permanently prevents you from carrying out the duties of your grade, your employer may decide you can retire early and take your pension and lump sum immediately.

Published:
15 December 2021
Last updated:
12 May 2022