Royal Mail pension news and discussion.Please note the advise given in this forum is unofficial, please use the links we have for a more detailed response or see an independent financial adviser.
baldrick wrote:
But of course you do have to factor in how long you expect to live and be drawing the pension.
Now where did I put that crystal ball?
No need for a crystal ball. You should be able to roughly estimate if you take into account your family's life spans and your own health.
I think I take after my dad who lived to 86, and I don't have any major health problems and I don't smoke, so I think I should reach 80 at least.
Of course I might get run over by a bus tomorrow, but if that happens it won't matter whether I took the lump sum or bigger pension.
Edit: If my family didn't last beyond their 60s or I had serious health problems, I would have taken a smaller pension and bigger lump sum.
When the new scheme starts receives legislation is it possible to take the whole of you pot as some kind of monthly pension and none as lump sum.
Many Thanks
Unless something changes, the CDC scheme will be made up of two parts:
1. The DBLSS which provides a tax free lump sum, worked out as 3/80ths of pensionable pay per year.
2. The CDC pension itself, worked out as 1/80ths, which provides a monthly income. Pending legislation, the plan is that it will be possible to transfer out the CDC benefits into a DC scheme for drawdown/annuity, etc if you want to.
Going by the literature we've been given, I don't think there'll be an option to commute the DBLSS pot into pension!
It's my plan to take the maximum lump sum and use that as a bridge between my pension and getting my state pension.
At least you get 25% of it tax free, if it was converted into a pension, it would be taxed at the normal rate.
Six of Nine loves Seven of Nine, together in Electric Dreams.
I thought it was 25% of your total pension pot that is tax free, not just any lump sum amounts. Could someone please correct me if I am wrong. I have paid extra into VCs and was hoping that the total pot would be used leaving my whole lump sum tax free
mr hil. wrote:I thought it was 25% of your total pension pot that is tax free, not just any lump sum amounts. Could someone please correct me if I am wrong. I have paid extra into VCs and was hoping that the total pot would be used leaving my whole lump sum tax free
AVC's are linked to your RMPP(NRA60 & NRA65) benefits and are usually used to fund some or all of the tax free lump sum.
You can take 25% of the total value of your 'pot' tax free! So an ideal would be for your AVC's & DBCBS, plus any standard lump sum(section B) to equal 25% of the total value.
Chimps_tea_party wrote:My understanding is that the whole lump sum is free.
It usually is.
But the DBCBS and AVC's have the potential to make the lump sum more than 25% of the total pot value for some people, depending on how much they're worth.
If that was the case, you could use the excess as taxable cash or transfer out to buy an annuity.
A friend of mine at a neighbouring office is paying AVCs. He is using these to replace some of his lump, therefore boosting his monthly / annual pension. This way, he adds to his lump sum too. Probably the best way of doing it. I take it that this is the reason for not taking the lump sum. The above method has another advantage too. As his wife is self employed, with a private pension, she will have limited income in retirement. He is using this method to boost not only their joint incomes, but providing HER, with a better widows pension, if he dies first.
Im sure Robert has answered this but can't find the answer.
Section C Member.....If you are taking your NRA 60 pnesion only, is it possible to take the maximum tax free lump sum of 25% from the combined pension and AVC pots and let the rest remain invested until you take the NRA 65 and new pension or will they insist you taking all of the money from your AVC pot. Its in a flexiplan AVC.
You can take the maximum tax free lump sum of whatever your combined total, NRA60 pension and AVCs are. I am assuming here, that you opted to take your AVCs at 60. NOT 65. You cannot leave part of your Flexi plan where it is, you have to take all of it in one go. This is how I've set my AVCs up. I'd done nearly 20 years when the NRA60 pension closed. About 3.5 years ago, I decided to pay AVCs, as my NRA60 pension wasn't going to be enough. I'm thinking of leaving the NRA65 pension until 65. I have a private pension I will take at 60. The current Cash Balance scheme can be taken at 60 without loss, along with you NRA60 pension. Just make sure that your figures are right. You can only take 25% tax free.
Hawkey99 wrote:Im sure Robert has answered this but can't find the answer.
Section C Member.....If you are taking your NRA 60 pnesion only, is it possible to take the maximum tax free lump sum of 25% from the combined pension and AVC pots and let the rest remain invested until you take the NRA 65 and new pension or will they insist you taking all of the money from your AVC pot. Its in a flexiplan AVC.
Thank you
When taking your NRA60 pension you will have to take all of your Flexiplan account in one go, with anything over 25% being taxed or transferred out for annuity purchase if over £1k or commuted to more pension if less than £1k.
But I believe, although have no experience, that you can then start paying into Flexiplan again from scratch , and the same would apply to Bonusplan.
Obviously you would have to factor in the DBCBS into your figures too and when you plan to access that money, which has to be taken at the same time as your NRA60 and/or NRA65 pensions.
