Rmpp 65 options

[roy61uk]

Hi all, i retired from RM in November and i have been taking my 60 pension for several years, would I be right in thinking that option 2( reduced income) would yield £15k tax free + £38k cb + £6866 at 25% tax free and 75% taxed, given that my rmpp + rmsps total £11216 per annum and only source of income, would option 2 push me into 40% tax, my understanding is tax free doesn't count towards income and therefore I'm only paying 20% tax on £33650.

[max49]

Yes, it looks as if option 2 would give you £33, 650 which would be taxed at 20%. However, I used some of my AVC to fund the lump sum from the Capita part of my 65 pension, therefore not paying tax on it and getting a slightly larger annual pension. The remainder of my AVC is still invested, and when the time comes, I will transfer it to another provider where I can drawdown from it over a number of years.

If you don't use your Cash Balance to fund the lump sum part of your RM 65 pension then you don't have to take it immediately as taxable cash, there is the option to transfer it to another provider, where you can have different options, such as drawdown, buying an annuity. Again these options don't have acted on immediately you can take your time to decide once the money has been transfered.

I realise what suits one person doesn't necessarily suit another, but I took the larger pensions, using the Cash Balance and AVC to fund the lump sums, because I thought a slightly larger income would be more beneficial to me as I (hopefully) grow older and need the heating on more ect.

Good luck with your retirement, and making your pension decision as to what suits you.

[Thailand1]

Hi,

If the or your figures are correct £33,650 plus your yearly income of £11,216 this will be below the 40% bracket....But hopefully others will chip in on the forum to confirm....Rob T??

The only other thing that's baffling is why aren't the CB & AVC figures on option 2?? Have I missed something?

Best wishes for the future.

[roy61uk]

Cheers max, I will also be using half my avc with capita, the other half is what is on the rmpp form. For me the extra 15k for a loss of £59 amonth with a ratio of 17 is worth it, plus I would be paying more tax when I get my state pension which makes it even less. Like you say everyone has different goals and I hope everyone achieves theirs.

[roy61uk]

Cheers Thailand, I was also confused by the option 2 quote, it would have made more sense to put the cb and avc figures in. It gives the option on the next page what you would like to do with these if you did pick option 2, strange.