RPI pension increase

[RobertT]

Where did I mention that I wasn't in favour of employer contributions?

A solution would be for Pensions to be fully funded by the people who contribute to them.

No idea why you are trying to disagree with me when you agree with most of what I have said.

No idea why you seem so out of touch with reality!

Have a nice day!

[milly]

I joined the RMDCP
My RMDCP Pension was transferred to my SIPP a couple of months ago.
Currently I don't pay into any Royal Mail Pension scheme.
Anyhow I would assume that the increase in the DBCBS wasn't funded by the tax payer .

It sounds like you're biting your nose off to spite your face. Why would you turn down free money?

I'm close to the income tax limit when I come to draw my Pension at 55 so I'm concentrating on investing in my Stocks and Shares ISA to receive tax free dividends.
No point paying extra tax to fund the Public Sector Pensioners .

You do realise pensions are by far the best way to make your money grow, even if it means paying tax on the way out? As long as you stay within the 20% band.
For someone who doesn't want to pay tax, you're doing a good job of paying too much!

How am I paying more tax by keeping my Pension income under £12570 and using my Stocks and Shares ISA to receive Tax free dividends to supplement my Pension?
If my pension pays £10k per annum and my Stocks and Shares ISA pays 10k in dividends, how much tax do I pay?

[RobertT]

How am I paying more tax by keeping my Pension income under £12570 and using my Stocks and Shares ISA to receive Tax free dividends to supplement my Pension?
If my pension pays £10k per annum and my Stocks and Shares ISA pays 10k in dividends, how much tax do I pay?

You have to look at things in the round. It's not just a case of how much you might lose on the way out, it's also about how much you gain on the way in!

With your RM pension, your contributions come out of your pay before tax is deducted and you also gain due to salary sacrifice(PSE). Meaning each £100 gross that you pay in only costs you £68. The taxman pays the other £32.

Going by your previous posts you may not agree with getting money from the taxman, as it's effectively from UK tax payers. But most people would think, it's available so why not take advantage? Just like those public sector workers!

Add on RM's contribution and assuming you're paying in at the top rate for the RMDCP, you're also getting another £166 from the company.

Is there any other form of investment at your disposal, where you can put in £68 net and get another £198 added on for doing absolutely nothing? That's an increase of 291%.

When you come to withdraw your money and assuming you've already hit the level of the Personal Tax Allowance from other pensions. 25% of that £266 will be tax free and you'll pay 20% tax on the rest.
Meaning in total, you'll lose £40 in tax and you'll have £226 in your pocket. Which is still a 232% uplift on your £68, despite the fact you've paid tax.

If you want to put £100 in an ISA, it will come out of your net pay, meaning you've already paid tax and NIC's on it. To earn £100 net and based on income tax of 20% and NIC's of 12%, you'll have to earn £147 gross. Your money has effectively gone down, compared to a pension.
There's obviously also no employer contributions to help you out.

So just because you might pay a bit of tax when accessing your pension, doesn't mean you'll be worse off overall.

I can understand the flexibility and investment choices a SIPP has over the RMDCP and transferring isn't necessarily a bad move. But surely you take full advantage of the RMDCP first and transfer once it closes and CDC starts.

I can also appreciate the flexibility of an ISA and having a tax free income from that, but it'll have cost you a lot of money on the way in.


*Figures have been rounded up or down to the nearest £.
*I haven't included any investment growth, for obvious reasons.

[milly]

As I have said previously the Royal Mail Pension is choc full of garbage debt instruments which I would never personally invest in.
My Sipp and ISA keeps my investments diversified.
The average dividends I receive from those funds are paying nearly as much as my Royal Mail Pension will, but for a fraction of my Royal Mail Pension pot.

[RobertT]

As I have said previously the Royal Mail Pension is choc full of garbage debt instruments which I would never personally invest in.

Out of the eleven funds available via the RMDCP, 6 of them have no connection with 'garbage debt' as far as I can see.

My Sipp and ISA keeps my investments diversified.
The average dividends I receive from those funds are paying nearly as much as my Royal Mail Pension will, but for a fraction of my Royal Mail Pension pot.

Great!
But if you'd stayed in the RMDCP for a bit longer you could have taken advantage of more 'free money' and then transferred it over to your SIPP to invest how you chose?
Free money, better from a tax point of view and better returns.
Sounds like a win win to me!

[milly]

As I have said previously the Royal Mail Pension is choc full of garbage debt instruments which I would never personally invest in.

Out of the eleven funds available via the RMDCP, 6 of them have no connection with 'garbage debt' as far as I can see.

My Sipp and ISA keeps my investments diversified.
The average dividends I receive from those funds are paying nearly as much as my Royal Mail Pension will, but for a fraction of my Royal Mail Pension pot.

Great!
But if you'd stayed in the RMDCP for a bit longer you could have taken advantage of more 'free money' and then transferred it over to your SIPP to invest how you chose?
Free money, better from a tax point of view and better returns.
Sounds like a win win to me!

I also have no interest in investing in the hugely overpriced FAANG stocks either which make up many of the equity funds.

[milly]

I see Birmingham City Council are effectively bankrupt, their Pension liability looks pretty dire .
Who will bail them out?
Probably the first of many!

[hermon]

Milly - interesting thread and thanks for your contribution, but if you are suggesting that paying into RMs pension through PSE (or otherwise) is not a wise investment, I think you need sit down and look at the figures outlined previously. Everyone should be taking advantage our 'relatively' generous pension scheme
You could be inadvertently misleading people (to their detriment) with your posts.

[milly]

Milly - interesting thread and thanks for your contribution, but if you are suggesting that paying into RMs pension through PSE (or otherwise) is not a wise investment, I think you need sit down and look at the figures outlined previously. Everyone should be taking advantage our 'relatively' generous pension scheme
You could be inadvertently misleading people (to their detriment) with your posts.

That's a fair comment, but in the main I am referring to my own situation.
PSE is a fantastic benefit but as Pensions are very long term investments and they are at the mercy of the whims of politicians who can and do change rules that aren't necessarily to the benefit of the investor, one example of which is their constant tinkering with the age you can draw your pension.
I would recommend that people take advantage of the tax breaks offered by PSE and the employer contributions but people should also look at Stocks and Shares ISA'S due to their flexibility.

[heapsy]

I'd agree with that Milly. The flexible nature of ISAs means you can do what you like, when you like. Ideal when you think of the different pension ages we are facing at work. 60,65, possibly 67 for some. The state pension will be later than that for some, and let's face it, who can, or would even want to go on forever?

[yellowbelly]

Milly - interesting thread and thanks for your contribution, but if you are suggesting that paying into RMs pension through PSE (or otherwise) is not a wise investment, I think you need sit down and look at the figures outlined previously. Everyone should be taking advantage our 'relatively' generous pension scheme
You could be inadvertently misleading people (to their detriment) with your posts.

That's a fair comment, but in the main I am referring to my own situation.
PSE is a fantastic benefit but as Pensions are very long term investments and they are at the mercy of the whims of politicians who can and do change rules that aren't necessarily to the benefit of the investor, one example of which is their constant tinkering with the age you can draw your pension.
I would recommend that people take advantage of the tax breaks offered by PSE and the employer contributions but people should also look at Stocks and Shares ISA'S due to their flexibility.

See - you can make a reasoned comment without referring to the 'parasitic class'.

[milly]

Milly - interesting thread and thanks for your contribution, but if you are suggesting that paying into RMs pension through PSE (or otherwise) is not a wise investment, I think you need sit down and look at the figures outlined previously. Everyone should be taking advantage our 'relatively' generous pension scheme
You could be inadvertently misleading people (to their detriment) with your posts.

That's a fair comment, but in the main I am referring to my own situation.
PSE is a fantastic benefit but as Pensions are very long term investments and they are at the mercy of the whims of politicians who can and do change rules that aren't necessarily to the benefit of the investor, one example of which is their constant tinkering with the age you can draw your pension.
I would recommend that people take advantage of the tax breaks offered by PSE and the employer contributions but people should also look at Stocks and Shares ISA'S due to their flexibility.

See - you can make a reasoned comment without referring to the 'parasitic class'.

Sorry you don't like my verbiage, but how else would you describe Politicians, Civil Servants,Councillors and also people who make bogus welfare claims.

[yellowbelly]

Milly - interesting thread and thanks for your contribution, but if you are suggesting that paying into RMs pension through PSE (or otherwise) is not a wise investment, I think you need sit down and look at the figures outlined previously. Everyone should be taking advantage our 'relatively' generous pension scheme
You could be inadvertently misleading people (to their detriment) with your posts.

That's a fair comment, but in the main I am referring to my own situation.
PSE is a fantastic benefit but as Pensions are very long term investments and they are at the mercy of the whims of politicians who can and do change rules that aren't necessarily to the benefit of the investor, one example of which is their constant tinkering with the age you can draw your pension.
I would recommend that people take advantage of the tax breaks offered by PSE and the employer contributions but people should also look at Stocks and Shares ISA'S due to their flexibility.

See - you can make a reasoned comment without referring to the 'parasitic class'.

Sorry you don't like my verbiage, but how else would you describe Politicians, Civil Servants,Councillors and also people who make bogus welfare claims.

And normal service is resumed

'Bogus welfare claims' - criminals.

As for the rest - again you're trying to label large swathes of the working population without knowing them individually
and because of the system that rewards them. And you're making use of part of that system yourself - why should you be
entitled to tax breaks on pension payments? Because it's the system that's why - but don't hear you complaining about
feathering your own nest to the detriment of (for example) the NHS who could no doubt use the funds that provide your pension
tax breaks.

[milly]

Milly - interesting thread and thanks for your contribution, but if you are suggesting that paying into RMs pension through PSE (or otherwise) is not a wise investment, I think you need sit down and look at the figures outlined previously. Everyone should be taking advantage our 'relatively' generous pension scheme
You could be inadvertently misleading people (to their detriment) with your posts.

That's a fair comment, but in the main I am referring to my own situation.
PSE is a fantastic benefit but as Pensions are very long term investments and they are at the mercy of the whims of politicians who can and do change rules that aren't necessarily to the benefit of the investor, one example of which is their constant tinkering with the age you can draw your pension.
I would recommend that people take advantage of the tax breaks offered by PSE and the employer contributions but people should also look at Stocks and Shares ISA'S due to their flexibility.

See - you can make a reasoned comment without referring to the 'parasitic class'.

Sorry you don't like my verbiage, but how else would you describe Politicians, Civil Servants,Councillors and also people who make bogus welfare claims.

And normal service is resumed

'Bogus welfare claims' - criminals.

As for the rest - again you're trying to label large swathes of the working population without knowing them individually
and because of the system that rewards them. And you're making use of part of that system yourself - why should you be
entitled to tax breaks on pension payments? Because it's the system that's why - but don't hear you complaining about
feathering your own nest to the detriment of (for example) the NHS who could no doubt use the funds that provide your pension
tax breaks.

I try and pay as little tax as possible, better in my pocket, rather than funding some Civil Servants Gold-plated pension or wasting it in that big black hole known as the NHS.
You can virtue signal all you like but the parasites are taking down this Country due to many people being afraid to speak the truth.

[guardianangel]

cashed all mine in at 55 and used the lump sums on some fantastic holidays only 22 years until 80 let that sink in ,why all the saving for very few years of enjoyment,nothing worse than a dribbling 70 year old with shitloads of money in the bank,live for today as tomorrow may not be yours,the way this company and country is going soon there wont be anything left.