Claiming a civil service pension while still working

Yes, you can claim your civil service pension and still work, but if a Civil Service employer pays you, abatement can reduce the pension.

Whether working again costs you pension depends on three things: who the new employer is, which section of the scheme your pension is in, and whether your pay and pension together come to more than you earned before. Free routes include Civil Service Pensions itself and MoneyHelper. To have the whole picture checked, State Pension and other pots included, an FCA-authorised adviser gives you a free ring after this page's short form arrives.

Claiming your civil service pension and still working: three routes

You can, in three different ways, and the rules differ for each. The scheme's classic guide says "Abatement does not apply if you are aged 75 or over, or if you take a job with an employer outside the Civil Service pension arrangements." So the first way is simple: claim after you leave, then work somewhere outside those arrangements, and abatement is not the issue.

The second way is to stay in Civil Service employment and take partial retirement, which lets you draw some or all of your pension while you carry on in a reshaped job. The third is to be re-employed by a Civil Service employer after you have retired. Abatement can apply to both the second and third routes. The next sections take these in turn.

What is civil service pension abatement?

Abatement is a reduction in your pension while you earn from a Civil Service employer. The scheme's abatement page says "If you retire taking your PCSPS benefits (classic, classic plus, premium, nuvos) and continue to work for (or are reemployed by) a Civil Service employer, your pension may be reduced (abated)." It only bites when your new pay and pension together beat what you earned before you retired.

The test works in three steps. First, the scheme takes the "salary of reference" set when you retired, with cost of living increases added where appropriate. That is often your pensionable earnings in the last 12 months, though a better earlier year can be used instead. Second, it adds your new salary to your pension, making assumptions about any lump sum you took. Third, "If the sum in Step 2 is greater than the sum in Step 1, we will reduce the pension by the difference."

The partial retirement guide gives a worked case. Jane has a nuvos pension and a salary of reference of £20,000. Her new salary of £15,000 plus a notional pension of £5,688 comes to more than £20,000, so "her pension will be reduced (abated) by £688 a year." Her salary and pension together land at the old pay level, and once she finally retires "the abatement will stop and Jane will receive her full pension amount." That is the guide's own illustration, not a forecast for you; the scheme's online calculator gives an indication for your record.

When abatement does not apply

Three things take abatement off the table. Alpha is one: the scheme says "alpha pensions are not subject to abatement." Age is another, since abatement does not apply from age 75. The last is the employer: a job outside the Civil Service pension arrangements is not caught.

If you hold more than one section, the rule is wider than you might expect. The classic guide says that if you have any Civil Service pension in payment, "whether from classic or another section of the scheme," and you are re-employed by a Civil Service pensions employer, your pension may be abated. Whether a given employer is inside those arrangements is something the scheme can confirm, and the adviser who calls you after this page's short form will explain that point free too.

Staying in your job: partial retirement

You do not have to leave to claim. "The partial retirement rules allow you to take some or all of your pension and carry on working", and you can build up further pension in the reshaped job. The conditions are strict, and your employer decides whether to agree:

• Your salary, with any permanent pensionable allowances, must fall by at least 20%.
• You must apply no later than 3 months after reshaping your job.
• You can only opt for partial retirement once.
• You must cover any Guaranteed Minimum Pension or "WPS liability" you have.

The guide says your employer "is not under any obligation to agree to reshape your job." Partial retirement is possible at any age from 55, or 50 if you joined classic, classic plus or premium before 6 April 2006, but a pension taken before pension age (60 in classic, classic plus and premium, 65 in nuvos) is reduced for early payment, and that reduction is permanent. The civil service early retirement page covers the size of the cut and the age changes from 2028. Whether alpha members can use partial retirement in the same way is worth asking the scheme, and an adviser can talk the point through free when they ring you back.

In classic, classic plus and premium, partial retirement cuts your reckonable service by an amount matching the pension you take, and the guide warns that your final, total pension could end up bigger or smaller as a result, so see the numbers before you commit.

What can change the amount of abatement

Abatement starts from the day your new job begins, or from the date you take partial retirement. After that, "We do not increase the level of abatement because of normal annual pay rises, or if you work overtime." A promotion, a change in your hours, a retrospective pay rise or a new pensionable allowance can change it.

A smaller abated pension still counts as income. How your pension is taxed alongside new pay is covered in is a civil service pension taxed, and yearly rises are in civil service pension increases.

Before you accept a job or reduce your hours

Ask first. The scheme says that if you are retired and applying for a job with a Civil Service employer, "you can ask for an estimate showing the potential effect of any abatement." The nuvos guide adds that anyone considering re-employment "should ask your prospective employer for further information on the impact on your pension." Do this before you sign, because abatement runs from the first day of the job.

Other pensions and benefits matter too. A wage, an abated pension and a State Pension all land in one tax year, so before deciding, complete this page's short form and let an FCA-authorised adviser lay them out together at no cost. Other pages cover the lump sum, what happens if you leave and how much you will get. Teachers should read the Teachers' Pension equivalent, because that scheme has its own rules.

Questions people ask about working after claiming

How can I estimate my abatement before I decide?

The partial retirement guide says the scheme's website has a calculator that gives "an indication of whether abatement would apply to your pension and how much it would be." Use it with your latest benefit statement to hand.

Do I have to claim at pension age?

No. The classic guide says "If you wish, you may defer taking your pension." Waiting past 60 earns no late-payment uplift in classic, whereas nuvos adds one after 65, so check your own section's guide.

Does abatement stop?

In the partial retirement guide's example the abatement stops when the member finally retires, and the full pension is paid from then.

Does abatement apply to my alpha pension?

No, the scheme says alpha pensions are not subject to abatement. If you also hold older classic, premium or nuvos benefits, those can still be abated, so check how your pension is split.

Can I claim and work part-time for the same employer?

Yes, in two ways. Partial retirement lets you stay on in a reshaped job if your employer agrees and your pay falls by at least 20%, and the partial retirement guide adds that the reshaped job can be with another employer, as long as both take part in the scheme and there is no break between the jobs. Or you can retire fully and be re-employed, in which case abatement can apply to classic, premium or nuvos pensions.