Civil Service Final Salary Pension? – you do have options

I am truly grateful that I have my final salary pension and that I chose to keep it by staying in the same department for 30 years.

Eventually I jumped over to another department 3 years ago to increase my salary.

I am happy to ignore all the haters who comment on articles about civil service classic pensions (final salary) with their blinkered views on what we earn, how much work we do and what our pensions will be.

I know what I and my colleagues have earned. What our likely pension figures are and these are so far removed from the haters vision its laughable.

So I will ignore.

Apparently, public sector workers (this includes civil servants) earn on average £506pw. Whereas private sector workers earn on average £464pw.

Being an average means there will be some earning more and some earning less.

None of my staff in my last job earned as much as £464pw never mind £506pw.

If I hadn’t worked my butt off to get myself promoted I wouldn’t have earned that much either.

I am lucky (?) to have been able to use my knowledge and experience to do this.

Many of my colleagues haven’t done so and continue to be paid below both the national average wage and private sector wage.

3 pound coins on a dark wood background

Final Salary Pension Gratitude

However, what we earn is only one side of the government coin we receive.  The other side is our “gold plated” final salary pension.

And this is where we now gain far more than the private sector since so many employers have closed their pension schemes to new and existing employees.

The negativity around public sector pensions seems to have increased in direct proportion to the number of private sector pensions closing.

In 2005 43% of private sector employers offered a final salary pension scheme, now there is talk of none being open to new employees at all!

When you factor in wages across the board not increasing in recent years due to the 2008 financial crisis and losing your pension scheme, of course it is hard to watch civil servants retain their pension rights.

You could debate as to whether the real discussion should be about private sector employers being allowed to close their pension schemes but UK legislation does allow it so let’s not go there.

When you look at how much you would need to pay into a personal pension to try and replicate a final salary pension you begin to see that a pension like this really is gold plated.

My payslip tells me my employer pays roughly 18% into my scheme on top of my 5.45% contribution. That is equivalent to an 18% pay increase right there.

I can understand the haters.

final salary pension

Small pensions

However most civil service final salary pensions paid are not large, the average payout is £7,800. This could be for a number of reasons including:

  • Working part time
  • Taking a career break
  • Taking partial retirement resulting in a pension significantly reduced
  • Working for only a few years in the civil service

Under the old civil service classic pension rules you needed to work 40 years full time to get a pension worth half your final salary. And of there was the civil service classic pension lump sum that everyone looked forward to.

With the new civil service pension rules (alpha) it’s more complicated as you accrue 2.3% of your annual salary for each year worked. And there is no automatic lump sum.

The new scheme has the potential to increase some pensions, especially those already half way through their employment.

But as it’s a career average pension then you are much more likely to end up with a smaller pension. To find out more about the new pension check out the civil service pensions website.

Do civil servants get a final salary pension?

Older civil servants will get a final salary pension, but only for the years they worked until 2015. All pension earned for new entrants and existing staff from 2015 is on a career average basis. This is where you pay a percentage of your current salary into the scheme.

As you usually start off in the lower grades, you are paying in less in those early years. It’s only if you move up the career ladder that your pension will improve.

protest march with placards


Hanging on to the old days

What I actually find frustrating though is my colleagues.

These are the people who are entitled to the civil service classic pension based on final salary, who still have a pension despite austerity measures and the financial crisis.

Yet they seem to do nothing but moan about their salary increases (capped at 1% for 8 years now) and about how they have to work longer to get their full pension (67/68 now rather than 60).

Don’t get me wrong these facts don’t fill me with joy but moaning about them doesn’t get you anywhere.

Over the years I have worked with numerous people looking for work and employed in other industries.

When you look at the bigger picture I think civil servants have a fairly good deal despite the recent pension changes.

Of course it would be nice if everything stayed the same but taxpayers pay our wages (we do too) and pensions have changed significantly for many taxpayers.

Why should we be in the minority to keep pensions in the way they were developed so many years ago?

Those private sector workers whose pension schemes have closed have had a pay cut of possibly up to 18% or more.

They now no longer have a pension and may have had 1% pay rises or none at all.

Our pay rises being capped at 1% for 8 years is not fun. Many civil servants have had to make decisions on what they spend their decreasing salary on.

But in the outside world during the same period people have had 20% pay cuts, lost their jobs and lost their pensions.

To still get 1% against that backdrop isn’t quite so bad is it? I know which job I would prefer to be in and have learnt to be grateful for what I am getting.

Is the civil service pension good?

There is no question that the civil service pension is good. It’s just not quite as good as it was when it was the civil service classic pension rules with lump sum.

It’s certainly much, much better than most pensions in the private sector, because most of these have ceased to exist for new entrants.

And of course you get both the civil service pension and state pension when you retire.

cork noticeboard with colored notes pinned to it

Take control of your pension options

You can accept the pay caps (albeit grudgingly) and the pension changes but it doesn’t mean you don’t have any choices as a civil servant.

You’re not stuck with that one employer, in that one location, in that one grade. You have choices.

There are things that you can do that can make a difference for your future self.

There are ways to increase your earnings whilst remaining in the civil service which could help counter the 1% pay cap:

  • get promoted
  • take on a 2nd job
  • increase hours at work (if part time)
  • take on a side hustle
  • Move to a better paying government department (some departments pay up to £3k more for the same grade)

You may be aware of at least some of these choices, you might not like them.

Some of them may not be doable or require changes to your domestic arrangements but those are still choices.

Doing nothing is also a choice.

And if you actively choose to do nothing and your status quo remains the same, then this is the choice you are making for now and for your future self.

Please don’t choose nothing, do something, anything. It could make a huge difference to your future income.

Changing times

lego person frowning

Occasionally I jump into the discussion on pensions and remind my colleagues that outside of the civil service people have lost their jobs or had their working hours cut.

They’ve lost their pensions or never had a pension from their employer.

My colleagues like to point out that they when they took on their job they were promised their pension at 60/65.

And now the government are changing things and its not fair.

I’m sorry but life isn’t fair and since when did things stay the same over 30+ years?

We have a divorce rate of nearly 1 in 2 yet when those divorcees married they promised to love, honor….. and be faithful to each other.

Well shock horror that things change eh?

As a civil servant you still have choices about your pension, how much you earn and where you work.

You absolutely can choose to:

  • leave the civil service and chase the money in private industry
  • go for promotion to increase your salary
  • move to a better paying civil service department (some departments pay up to £3k more for the same grade)
  • Pay extra into your civil service pension in order to leave earlier with a full pension
  • Make additional pension provision for yourself so you can retire when you want to
  • Leave at 60 and not take your pension until 67/68 (you will need to plan how you will live during this time)

I chose to do 3 of the above. Getting promoted; into a higher paying department and making additional pension provision for myself.

I will also be leaving waaaay before my pension age of 67 but won’t be taking my pensions when I leave. I’ll be deferring them until 60 (classic) and 67 (alpha).

If I had got my act together earlier I would also have paid extra into the civil service classic final salary pension scheme to buy extra years.

loose wad of sterling notes of different denominations

Take action

Don’t be bitter about our pension and pay changes, be active! Think about what you can do.

What are you prepared to do differently in order to take back control of your pension, your income and your retirement age?

These things are not set in stone. You have choices, please take them.

Start taking back control of your money by grabbing your copy of the Money Saving Starter Guide today.


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early retirement, reaching our enough

Last Updated on 5th April 2023 by Emma

About Emma

I'm here to help you become confident in making the best money decisions for you and your family. Frugal living has changed my life, let me help you change yours.

2 thoughts on “Civil Service Final Salary Pension? – you do have options”

  1. Interesting reading your views on this.

    Plus, wow – you don’t often read about bloggers talking about 30+ years at the same place – they’re all about changing employers to maximise their salaries!

    I thought my 21 years at the same company was a long stretch (before I was made redundant) but like you, one of my reasons for staying put was my final salary pension, which I guess is rare for the private sector. Knowing that I’ve got this pension does makes aiming for FIRE a lot easier, which I’m sure you’ll agree. Mine will be available from age 65.

    The recent strike by university lecturers really grated on me – one proposal I saw (which I think got rejected by the unions) was that member contribution would be 8.7% and employer contribution would be 19.3%

    WHAT!? I would chew my hand off for that kind of deal! From this month, my work pension contribution will be 3%, with my employer paying a paltry 2%, so I don’t think those lecturers know the meaning of ‘unfair’!

    I hear you on those moaning about their 1% caps – for several years following the financial crisis, nobody got any wage rises where I worked, we counted ourselves lucky for just having jobs during the waves of mass redundancies. Every time an all employees meeting was called, it was like Death was at reception, sharpening his scythe!

    Anyway, taking control of my pension options was what I did when I got made redundant – my original FIRE plan had assumed that I’d still be adding to my final salary pension so I had to adjust my plan and figure out how I was to make up for the ‘lost’ guaranteed income.

    PS – sorry for all these comments all at once, I’m just catching up on reading your blog posts!

    • Hi Weenie!

      I know most other FIRE bloggers are about chasing the money and I would too if it weren’t for where I am now at and where I have come from. I consider myself somewhat institutionalised after so many years and my skills set is definitely limited to the Civil Service these days (at my current pay grade with pension thrown in).

      The flexi time, paid domestic emergency leave (sick kids!) and gold plated pension added up to enough to make me stay. With a healthy bout of laziness thrown in for good measure.

      Were you like me and shouting at the TV when the lecturers strike was discussed? Meh, they don’t their born!

      I’m glad you were able to save the majority of your redundancy package, goes someway to compensate for no longer being able to contribute to a final salary scheme.

      Thanks for stopping by!


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