Pension for dummies

[Postie45]

Hi,

I have RMPS and RMPP ... are these completely separate pots ie one is worth RMPP 80,000 (CETV) the other is worth RMPS 66,0000. So does that mean my total pension pot between these two right now is 146,000 (CETV) ?
I need this CETV information for tax reasons.
Also do i add the predicted yearly pensions payouts from each together in their illustraions to estimate my total future yearly pension amount ?
Im mainly confused as theyre both pensions from Royal Mail and dont want to make the mistake that theyre directly tied to each other in any way.

Thanks in advance

[RobertT]

You've accrued pension on the basis of NRA60( upto 2010) and NRA65(2010-2018 + DBCBS), and that is how your benefits are set out on your statements.
So just add up your NRA60 benefits from both statements and that's what you're entitled to at 60, and do the same for NRA65.

But those benefits are paid out by RMSPS(up to 2012) and RMPP(2012+), hence the 2 statements.

The RMSPS was created after the privatisation of RM, because at the time the scheme had a deficit of about £10 billion and the government took over all the pension liabilities to enable the company to be floated.
The government/taxpayer are now responsible for paying out our pre 2012 pensions. The RM are responsible for 2012 onwards.

You have accrued pension up to 2018 on a Defined Benefit(DB) basis, which means what you get is based on your wages and length of service, so you don't have a pot of money as such. But if you were able to transfer out into another pension arrangement, then your benefits would be valued accordingly, which is where your CETV's would be used.

In practice it's only possible to transfer out of the RMSPS into another DB scheme offering similar benefits, whereas it is possible to transfer out of the RMPP into a Defined Contribution(DC) pension as cash.

The DBCBS is basically just a savings pot to take as a lump sum predominantly with your NRA65.

RM pensions are stupidly confusing, mainly due to various changes that have happened over the years, but I hope that helps to explain

*You can legally take pensions from age 55 if you want to, but reductions will apply if you take any before NRA.

[Postie45]

thank you ...so, to be clear my calculations were correct that i have essentially 2 pension funds with 1 CETV at 80k and the other 66k ? Im aware these CETV totals are only relevant if i transferred them to another pension which i dont actually have intention of doing - at least right now, but the tax wants to know my total pension value which i assume is 146k ?

[RobertT]

You have two pensions which are NRA60(up to 2010) and NRA65(2010+), but they are paid out by two different bodies - RMSPS(upto 2012) and RMPP(2012+).
So they are tied to each other to a degree, but if you've got CETV's from both, then you're right to just add them up - in your case £146k.

[freespeech]

thank you ...so, to be clear my calculations were correct that i have essentially 2 pension funds with 1 CETV at 80k and the other 66k ? Im aware these CETV totals are only relevant if i transferred them to another pension which i dont actually have intention of doing - at least right now, but the tax wants to know my total pension value which i assume is 146k ?

I'm intrigued why the tax man wants to know about a pension you haven't drawn yet?

[Postie45]

I'm intrigued why the tax man wants to know about a pension you haven't drawn yet?

moved to the US, they want to know about all accounts, savings, pensions etc

[Postie45]

You have two pensions which are NRA60(up to 2010) and NRA65(2010+), but they are paid out by two different bodies - RMSPS(upto 2012) and RMPP(2012+).
So they are tied to each other to a degree, but if you've got CETV's from both, then you're right to just add them up - in your case £146k. :thumbup

thank you very much !

[NorthernBoy]

Postie45

How’s the COVID situation over there, I guess it depends on which state you are in?

From what I can see on us media channels it’s likes most things are going well and most things are open / opening up. Whereas the uk media is very doom and gloom on the uk COVID situations despite low hospital rates etc. I guess it reflects cultural differences of US optimism rather than the uk precautionary approach.

[NWpostie]

I'm intrigued why the tax man wants to know about a pension you haven't drawn yet?

moved to the US, they want to know about all accounts, savings, pensions etc

Ah I did wonder why you were asking, ex pat US citizens here have to file every year to the IRS on all incomes, I had considered US citizenship myself until I realised the FATCA tax implication and choose not to.

[Postie45]

Postie45

How’s the COVID situation over there, I guess it depends on which state you are in?

From what I can see on us media channels it’s likes most things are going well and most things are open / opening up. Whereas the uk media is very doom and gloom on the uk COVID situations despite low hospital rates etc. I guess it reflects cultural differences of US optimism rather than the uk precautionary approach.

Im in Florida, outside of about 2 months of lockdown during the peak last summer, everything has been open and pretty much business as usual provided you wear facemasks in stores and restaurants have more spaced out seating, otherwise yeah its very different approach than UK.
Some states have been more strict about lockdown though, each state has its own rules, I guess in Florida they just dont care that much lol.

[Postie45]

Ah I did wonder why you were asking, ex pat US citizens here have to file every year to the IRS on all incomes, I had considered US citizenship myself until I realised the FATCA tax implication and choose not to.

yeah something which may also keep me going down the citizenship route. One good thing about Florida is no state income tax, so that helps.

[NorthernBoy]

Ah I did wonder why you were asking, ex pat US citizens here have to file every year to the IRS on all incomes, I had considered US citizenship myself until I realised the FATCA tax implication and choose not to.

yeah something which may also keep me going down the citizenship route. One good thing about Florida is no state income tax, so that helps.

Postie45

How is the cost of living out there these days as compared to the uk? I hear prices have gone up a lot especially rents, but I’m guessing wages are higher in general.

Good luck if you go down the citizenship route. I am jealous of those nice warm Floridan winters!

[Postie45]

Postie45

How is the cost of living out there these days as compared to the uk? I hear prices have gone up a lot especially rents, but I’m guessing wages are higher in general.

Good luck if you go down the citizenship route. I am jealous of those nice warm Floridan winters!

cost of living is more or less the same as UK, yeah housing in Florida especially is up a lot as it was hit hard from 2008 financial crisis, but seems back to its peak now. Groceries and fresh produce can actually be a LOT more expensive than UK, you have to be careful on what price youre buying stuff at and also it pays to shop at the cheaper grocery stores.
What really is a lot more expensive is both mobile phones and internet/ tv cable etc. Youre lucky to get an unlimited cell phone plan for less than $50 a month and even then they can reduce speed after the first 20gb. People are very much used to paying 100-120 for their contract and paying off a phone which to me is crazy. They try to bundle internet and cable and probably looking at $70 a month at best for that too. I know back in the UK I could get unlimited mobile phone from three for about 20 a month and internet with sky for about 20-30 quid.
Wages are generally higher, but if your job doesnt provide healthcare (most do to be fair) you can enjoy a $400/ month bill lol
On the other hand, cars are cheaper, gas is cheaper.