full time to part time pension

[stevenshm]

hello
I just wondered if you could answer a question for me?

I've been working for royal mail for 11 years and with the
avc i should have a final salary pension of about 14 years
built up before the changes come into effect
now if i wanted to go part time at lets say when i'm 55
would the final salary part of pension now be based on my part time wage
when i retired at 60-65?

just wanted to know because of all this talk of cutting hours and part time jobs
because i still have 27 years to go until i'm 60!

thanks

[Phil001]

It is very difficult to give pension advice in this way unless you are a pension expert. I would strongly suggest you seek independent advice and/or go on the Royal Mail pension site : http://www.royalmail.com/pensions and/or phone the RM pension helpline.

In the past up to April 2008 we had a final salary scheme. All pension up to then , is still a final salary eg if you are in Section B (aka POSSS) and had 20 years FT to April 2008 , then you have 20/80ths x final salary when you retire. If you were PT then you accrue at a lesser rate. If you were on 20 hours per week then it would be 10/80ths after 20 years , ie at half the rate.

After April, it changes to a CARE scheme. Each year you make contributions, this amount is "boxed off". If you have 20 years to go, then you have 20 separate years which separately increase by the RPI. So, you have 20 years x career average and NOT 20 years x final salary.

Clearly, if you are PT then you will contribute less - but each year of whatever you do contribute will be averaged out to get a career average , 20 years of contributions x career average. Currently, people contribute 6% of their salary (whether PT or FT). RM are paying 20%.

If you have 14 years FT up until April 2008, as far as I am aware you should get 14 years worth as FT based on your final salary, eg on the basis of the above 14/80ths x final salary. Going forward, it will be the career average - there is no final salary scheme. If you go part time at age 55 then you would just contribute 6% of your salary at that time to add to your "blocks" of contributions. NB If you are in Section C (POPS) then that scheme is a 60th scheme.

Also, as the retirement age is now 65 you can keep on contributing until age 65 if you want - I think the max would now be 45 years contributions.

I am not a pensions expert at all, but I hope this is of some help. The above is only what I THINK the impact is with the change. Get some clear advice and DON'T make a decision based on this explanation !!

Phil001

[RobertT]

As you have 11 years service you will be in Section C or POPS as that came into force in April 1987 and your pension is based on 60ths not 80ths.

I'm assuming from what you say that your paying into 'Add Plan' with your AVC,if so you will have to pay into it until you're 60 to get the full 3 years extra.

My understanding is that your final salary element will not be reduced if you work part time from 55,but your future CARE pension will be.

Hope this helps.