Underwhelming RMSPS Pension illustration.

[RobertT]

I think it's fair to say that every change to RM pensions over the years, has been to the detriment of the members.

It's fairly obvious how the changes from final to average salary and the increase in NRA from 60 to 65, etc, have affected benefits. But the introduction of the DBCBS is slightly different in my opinion.

If you compare the pension you would have accrued if CARE had continued, to the payout you'll get from the DBCBS. Based on averages, the pension will be better value over the longer term.

But what the DBCBS provides, is options!
It's been in operation for longer than originally planned and so the amount of cash it'll provide has increased to quite a healthy figure. Although it has become less tax efficient in the process.
It provides a one off lump sum that could be used to supplement income from other pensions, until state pension age, and so enable an earlier retirement. Which a larger CARE pension might not have done.
There's definite benefits in that!

*Transferring out for drawdown or annuity is also an option.

[milly]

https://www.thisismoney.co.uk/money/mar ... newcomment

Thank goodness Robert T says this is nothing to worry about

[RobertT]

https://www.thisismoney.co.uk/money/mar ... newcomment

Thank goodness Robert T says this is nothing to worry about

That article clearly relates to DC pensions.

[milly]

https://www.thisismoney.co.uk/money/mar ... newcomment

Thank goodness Robert T says this is nothing to worry about

That article clearly relates to DC pensions.

The Bond market is the biggest market on the Planet, if Bonds go pop then so does everything else

[RobertT]

I've said all along the bonds markets have affected DB and DC pensions differently.

In previous posts, I've provided links to back up my argument that DB schemes have actually done quite well out of it. Yours just backs up that DC's have done badly.

Ultimately it's up to you whether you believe what's written in black and white in front of your eyes. But you've provided nothing whatsoever, to say I'm wrong about DB's. Other than what you think!

Why not take a look at the RMPP figures for more info:

In 2021 it had a funding level of 103% and last year it was 111%.

As far as I'm aware, this years report and accounts isn't available yet, but I would be very surprised if it doesn't increase again.

[milly]

I've said all along the bonds markets have affected DB and DC pensions differently.

In previous posts, I've provided links to back up my argument that DB schemes have actually done quite well out of it. Yours just backs up that DC's have done badly.

Ultimately it's up to you whether you believe what's written in black and white in front of your eyes. But you've provided nothing whatsoever, to say I'm wrong about DB's. Other than what you think!

Why not take a look at the RMPP figures for more info:

In 2021 it had a funding level of 103% and last year it was 111%.

As far as I'm aware, this years report and accounts isn't available yet, but I would be very surprised if it doesn't increase again.

So defined benefit schemes aren't subject to market conditions?

[RobertT]

Do I really have to repeat myself?

[milly]

Do I really have to repeat myself?

Explain why our Pension is immune from anything that happens in the Financial markets?
I want you to explain why, because I really don't care what so-called Pension experts think who write nonsense in Pension publications.

[RobertT]

I've never said it was immune. Merely that recent high bond yields have actually helped the vast majority of DB schemes. Including the RMPP.

Whether you understand that or whether you care about what financial journalists write, is irrelevant to me.

The important link I provided was to the figures, and how DB schemes surpluses have increased over the same period that bond yields have increased. If you still disbelieve them, then that's your choice.

But I suppose you think it's all some sort of conspiracy.......

[milly]

I've never said it was immune. Merely that recent high bond yields have actually helped the vast majority of DB schemes. Including the RMPP.

Whether you understand that or whether you care about what financial journalists write, is irrelevant to me.

The important link I provided was to the figures, and how DB schemes surpluses have increased over the same period that bond yields have increased. If you still disbelieve them, then that's your choice.

But I suppose you think it's all some sort of conspiracy.......

So if high Bond yields have helped DB schemes then presumably if yields were to go down then that would be bad

[RobertT]

Bonds are no different to any other form of investment - equities, gold, etc. They all have their good times and bad times.

[milly]

I think I've got it now Mr T! I owe you an apology.
Essentially higher yields make it easier to fund the Pensions liabilities.
However as the Pension can only increase payments by 5% per year, you are correct the the fund value will increase but as we are in an environment of high inflation it means our Pension won't go bust but the Pensioner quickly loses money as the Pension payments won't keep up with inflation.
So over a long period of time our Pension loses an incredible amount of purchasing power.

[RobertT]

It's a case of the overall fund value reducing, but the liabilities reducing by more.

I don't think anyone really needs an explanation of how inflation can devalue someone's income, do they?

As far as RM pensions are concerned, the 5% RPI cap only applies to section C, when pensions are in payment. A/B is currently CPI and no cap.

Interestingly, there are plans to replace RPI as a measure of increasing pensions with CPIH, from 2030.
Traditionally RPI has always been higher, but not so more recently. It remains to be seen whether those plans happen, considering current rates.

[BenacreNick]

Thanks for all of your contributions.

However to get this conversation back to the original topic, is there anyone else out there like me, that is also underwhelmed by their figures on the RMSPS illustration?

Many thanks.

[RobertT]

Thanks for all of your contributions.

However to get this conversation back to the original topic, is there anyone else out there like me, that is also underwhelmed by their figures on the RMSPS illustration?

Many thanks.

Is there any reason why you might be more underwhelmed this year, compared to others?