Old section b/c death in service

[stephen500]

A question.
When RM end section B/C and CARE pension in 2018, will we still have death in service for these old schemes on top of any new death in service (if given) as part of a new DB cash scheme?
Thanks for any reply.

[RobertT]

My understanding is that we will only have one death in service payment up to a maximum level, regardless of which scheme is implemented from April 2018.

As the Cash Balance scheme is aimed at providing a tax free lump sum rather than having to commute some of your current pension to get one, it is effectively section D of the RMPP. Therefore I don’t really see the current death in service arrangements changing too much. Although ultimately I think such payments are something RM choose to give - they don't necessarily have to.

According to the recent RMTV ‘pensions special’, there would also be the opportunity to convert some or all of your accrued cash balance amount into more pension if you wish. Although whether that would be as more guaranteed pension via the RMPP, or using an annuity is unclear.

Hopefully RM will soon give us more in depth information.

[stephen500]

My understanding is that we will only have one death in service payment up to a maximum level, regardless of which scheme is implemented from April 2018.

As the Cash Balance scheme is aimed at providing a tax free lump sum rather than having to commute some of your current pension to get one, it is effectively section D of the RMPP. Therefore I don’t really see the current death in service arrangements changing too much. Although ultimately I think such payments are something RM choose to give - they don't necessarily have to.

According to the recent RMTV ‘pensions special’, there would also be the opportunity to convert some or all of your accrued cash balance amount into more pension if you wish. Although whether that would be as more guaranteed pension via the RMPP, or using an annuity is unclear.

Hopefully RM will soon give us more in depth information.

What I find hard to get my head around is that our death in service, is protected by an act of Parliament?

[RobertT]

To be honest I’m not too sure whether the death in service payment is protected by law or not. But there is nothing to assume that it will disappear after April 2018. Infact under the DC proposals they were going to increase it:

5. How would my death in service benefits be affected by the changes?

The overall death in service lump sum would remain as 4 x pensionable pay, but would be based on your DC pensionable pay. There would be an additional death in service lump sum of 2 x DC pensionable pay payable to your dependants together with the value of your retirement account, plus there would be additional death benefits for your dependants based on your Plan service and pension benefits earned to 31 March 2018.

Current contributing members of the RMDCP also get a death in service payment of 4x pensionable pay. That is paid for by the trustees taking out life assurance on our behalf. Although whether that is also the case with the RMPP, I’m not too sure. It may come out of the overall ‘pot’?

We can only speculate what those who join the Cash Balance scheme might get, as RM haven’t told us yet! But I would guess that it would stay as now but with the addition of the value of your ‘cash balance’ on death. So :

4x pensionable pay.
Cash value of your CB pot.
Spouses RMPP pension, which may include a lump sum if in Section B.
Cash value of any AVC's.

Death in service payments can vary a lot between employers: https://www.theguardian.com/money/2015/ ... loyers-pay" onclick="window.open(this.href);return false;

[stephen500]

A mute point but even though death in service in principle may have gone up, mine would have gone down, as my pensionable pay (night allowance) was due to be made non pensionable