Probably a really stupid question!!

[pacey]

Hi all,

This is something that has been bothering me for a while when I read this board, and I’m sure for everyone else it’s a really obvious answer - so please forgive me for the stupid question!

When people quote their letters on here of what pension they will receive such as the example below - why is there an option 1, when option 1a gets a lump sum as well but with the same income? Why would you take option 1? Feel like I’m missing something really obvious!

Option 1 & 1a
1 £2723:23 PA £8169:69 None None
1a £2723:23 PA £8169:69 + £9985:17 £36,650:48

I’m nowhere near retiring yet, but read these boards as want to understand it when my time comes.

[NWpostie]

I'm some time off yet myself yet I find it disconcerting that we will only get £2,723 a year pension, how long was the service is important to note for comparison.

[freespeech]

I'm some time off yet myself yet I find it disconcerting that we will only get £2,723 a year pension, how long was the service is important to note for comparison.

Both NRA60 and 65 have components from two providers. This is likely just part of the overall pension amount.

[pacey]

These figures were just ones I plucked out of a thread further down the page. So I have no idea how long this persons service has been.

My question was just about why anyone would take 1/ rather than 1a/ - as I don’t get why you wouldn’t take a lump sum if it had no bearing on your pension amount? Or have I totally misunderstood what it’s saying?

[RobertT]

The figures you quote sound as if they're RMPP section A/B Age65 benefits, which is the pension accrued 2012-2018. The majority of your DBCBS cash(accrued 2018-2024) is usually taken with those benefits!

Option 1 is basic pension plus standard lump sum and no DBCBS, meaning you can transfer that out instead, which might be more tax efficient and more flexible for some people.

Option 1a is also basic pension and lump sum, but also includes the DBCBS, with the lower figure being tax free and the higher figure being paid as a UFPLS(1st 25% of that also tax free).

[pacey]

Ah ok - thank you as usual Robert

So I am a scheme C member so will I not have a 1/1a option in the same way?

[RobertT]

Section C members don't get a lump sum as standard as part of their normal benefits, but they do have the option to exchange some pension to get one.

I got a quote from the RMPP for taking my section C pension early, although I didn't actually do so.
My options were as follows:

Age60:

1. Unreduced pension / no tax free cash / no DBCBS
1a. Unreduced pension / no tax free cash / a small amount of DBCBS

2. Reduced pension / 25% tax free cash / no DBCBS

Age65:

1. Unreduced pension / no tax free cash / no DBCBS
1a. Unreduced pension / no tax free cash / DBCBS tax free / DBCBS taxable

2. Reduced pension / 25% tax free cash / no DBCBS

*If you choose an option with no DBCBS, it can be transferred out instead, pending the £30k advice rule, or it can be taken as a UFPLS. .
*Although the RMSPS pay the vast majority of Age60 benefits, the RMPP are responsible for some inflationary increases to them aswell, so a small amount of DBCBS maybe payable with Age60.
*There is also the opportunity to take a smaller tax free lump sum, if so, your pension won't be reduced by as much.

[pacey]

Thank you so much RobertT - so very helpful, I really appreciate you taking the time to respond