VR and the £ 750 Financial Advice Payment

[jasperlad]

Hi, this is my first ever post even though I have now left RM after 32 years :o). I took the VR offer and left in June this year. I have lifted both my NRA 60 and NRA 65 pensions which are now in payment (took them until September!), and am currently in the process of transferring out my DCBS pot and my AVCs into a Drawdown Account.
As far as I can tell I meet the requirements for the £750 payment for financial advice under the Pension deal agreed under the Four Pillars Agreement. My question is has anyone else who has taken VR and their NRA 65 benefits received this payment (and how long did it take to receive it?) or are Royal Mail no longer honouring the agreement?
Thanks in advance for any help on this matter.

[Postee2]

Hi, this is my first ever post even though I have now left RM after 32 years :o). I took the VR offer and left in June this year. I have lifted both my NRA 60 and NRA 65 pensions which are now in payment (took them until September!), and am currently in the process of transferring out my DCBS pot and my AVCs into a Drawdown Account.
As far as I can tell I meet the requirements for the £750 payment for financial advice under the Pension deal agreed under bythe Four Pillars Agreement. My question is has anyone else who has taken VR and their NRA 65 benefits received this payment (and how long did it take to receive it?) or are Royal Mail no longer honouring the agreement?
Thanks in advance for any help on this matter.

You may well in part have answered my very long and convoluted post on trying to understand my pensions. I've a long way to go yet before can take them.
But can I ask did you take 25% lump sums for the age 60 & 65 pensions ? If so did you take them together or separately, and do you have any idea how they worked the 25% lump sum out ?

Also do you know if you now are entitled to 25% tax free on the remaining cash plan pension and AVC's (I suppose in part all of this is why you are seeking a pensions financial advisor). Just wondered if you had any idea. And do you HAVE to transfer those out or can you leave them in the royal mail pension plan if you choose to ?
Thanks in advance.

[RobertT]

Hi, this is my first ever post even though I have now left RM after 32 years :o). I took the VR offer and left in June this year. I have lifted both my NRA 60 and NRA 65 pensions which are now in payment (took them until September!), and am currently in the process of transferring out my DCBS pot and my AVCs into a Drawdown Account.
As far as I can tell I meet the requirements for the £750 payment for financial advice under the Pension deal agreed under the Four Pillars Agreement. My question is has anyone else who has taken VR and their NRA 65 benefits received this payment (and how long did it take to receive it?) or are Royal Mail no longer honouring the agreement?
Thanks in advance for any help on this matter.

As far as I'm aware it's still a thing, but as with all things RM, it's always been a difficult process to get it paid.

From memory, as long as you receive your NRA65 within 13 weeks of leaving, you should get the £750. It sounds like you might be on the cusp of that?

Assuming you fit that criteria, I think you'll have to contact HR.

[jasperlad]

Hi Robert, thanks for the reply.
I applied in March to take both pensions from my leaving date in June and basically had to harass both RMPP & RMSPS to send out my Options forms until I finally received them early August.
My NRA60 & NRA65 have both been paid from 4th June although I didn't receive any payments or backdated payments until the last week of August so I should be within the 13 weeks.?

[jasperlad]

Hi,
I decided to take the maximum lump sums from both NRA60 & NRA65 pensions and then transfer out my remaining cash pot and AVCs to a Retirement Drawdown account, which yes I can then take 25% of the drawdown tax free and then take taxable payments thereafter.
The rule of thumb for calculating the maximum lump sum from your pensions is Multiply your annual pension by 20 years which is what your pot is worth and 25% of that is tax free, with your annual pension being reduced accordingly. (roughly £1000 pension reduction gets you £21000 lump sum)
If you use your DCBS pot or AVCs to provide your lump sum then these are added to your 20 X annual pension to give a total pension pot value which you are then entitled to take a 25% tax free lump sum from.
Hope this helps.

[jasperlad]

That was an answer for Postee2

[Postee2]

Hi,
I decided to take the maximum lump sums from both NRA60 & NRA65 pensions and then transfer out my remaining cash pot and AVCs to a Retirement Drawdown account, which yes I can then take 25% of the drawdown tax free and then take taxable payments thereafter.
The rule of thumb for calculating the maximum lump sum from your pensions is Multiply your annual pension by 20 years which is what your pot is worth and 25% of that is tax free, with your annual pension being reduced accordingly. (roughly £1000 pension reduction gets you £21000 lump sum)
If you use your DCBS pot or AVCs to provide your lump sum then these are added to your 20 X annual pension to give a total pension pot value which you are then entitled to take a 25% tax free lump sum from.
Hope this helps.

That's what I thought. This is what I've been trying to ask about, that the Cash pot and the AVC's are added to the 20x annual pension to work out the lump sum. But I'm really confused now because RobertT says they can't be used to make your Royal Mail pension bigger. But they are all part of your pension. I know they are fixed amounts but it makes sense to me that they should be added on to the 20x multiple for the lump sum payment.
How in practice would this work do you know ?
Or RobertT ?

[RobertT]

As I said in another recent thread, the 25% rule works if your Cash Balance/AVC's are equal to, or less than 25% of your pot.

So if you had a Age60 pension of £5,000 that would give you a pot of £100,000, using the 20x multiple. Then add on £20,000 of CB/AVC's, giving you a total pot of £120,000.
In that scenario, 25% of the total pot is £30,000, meaning you could just take the £20,000 as tax free cash and a full pension, or commute some pension to make the tax free cash up to 25%.

But it doesn't work if your CB/AVC's are higher than 25% of pot value.

So again a £5,000 pension would be a £100,000 pot. But if you had £50,000 in CB/AVC's, you'd have a total pot of £150,000.
Your CB/AVC's are higher than 25% and it's not possible to convert that excess into more RM pension.

So here's where the maths vary from above and get a bit more complicated.

You can't take more pension than the £5,000 you accrued. So if you assume the £100,000 is 75% of your total pot, that means the other 25%(the tax free cash) can be made up using CB/AVC's.

In this example, that would be a tax free amount of £33,333. With the remaining being paid out as a UFPLS, meaning the first 25% of that is also tax free

A simple way to work it out is to just divide the £100,000 by 3 and then multiply by 4. The amount above £100,000 being what's tax free.
Obviously replacing my example figures with your own.