CDC Pension Question?

Stef · Post by **Stef** » 27 Oct 2018, 20:48

Hopefully someone can confirm whether this is true of not. I seem to remember reading the agreement in January on the new CDC Pension. I vaguely remember that there was a part in the agreement that said you would have an option to pay a higher contribution and therefore receive your pension at 65 instead of 67.

Post by **RobertT** » 28 Oct 2018, 06:35

The voluntary contributions would be an extra 1% from employees, which in turn would attract another 1% from RM. Those contributions would go towards the lump sum element of the CDC pension arrangement, which is known as the Defined Benefit Lump Sum Scheme(DBLSS).

The idea being that extra 2% would equate to the same amount of lump sum cash at 65 taking an early payment reduction into account, as you would have got at 67 unreduced.

There was no mention of being able to pay more into the CDC scheme itself, and so accruing a bigger pension.

The option to pay those extra contributions into the DBLSS is confirmed on page 7 here.

Rommagic · Post by **Rommagic** » 28 Oct 2018, 11:12

At the moment what per cent per week is rm paying into our pension ? Is it 13 per cent?.

Post by **RobertT** » 28 Oct 2018, 12:56

Rommagic wrote:At the moment what per cent per week is rm paying into our pension ? Is it 13 per cent?.

RM are paying a total of 15.6% into the DBCBS, of which 13.6% is going towards our lump sum, while the other 2% goes towards other member benefits like death is service and ill health payments.

When/if the CDC scheme is implemented, their contribution will be 13.6%.

Rommagic · Post by **Rommagic** » 28 Oct 2018, 19:11

Thanks Robert.

Stef · Post by **Stef** » 28 Oct 2018, 20:04

Many thanks RobertT for keeping me right. Working to 67 years of age is not an attractive option. Any option that helps workers retire sooner is better for most. Roll on retirement.

Woody Guthrie · Post by **Woody Guthrie** » 28 Oct 2018, 20:43

When/if the CDC scheme is implemented, their contribution will be 13.6%.

Which will be split between the CDC pension and the DBLSS lump sum.
I think around 10% will go into funding the pension itself with the remaining 3% odd going into the lump sum.

It's an important fact that hardly gets mentioned, unlike the previous scheme where it was optional whether you took a lump sum and therefore reduced your pension the DBLSS lump sum is never part of the CDC pot and therefore must be taken as a lump sum.

Personally I would rather have that 3% going into my retirement income or at least be offered the choice.

Post by **Aquarius** » 29 Oct 2018, 15:51

Woody Guthrie wrote:
When/if the CDC scheme is implemented, their contribution will be 13.6%.
Which will be split between the CDC pension and the DBLSS lump sum.
I think around 10% will go into funding the pension itself with the remaining 3% odd going into the lump sum.

It's an important fact that hardly gets mentioned, unlike the previous scheme where it was optional whether you took a lump sum and therefore reduced your pension the DBLSS lump sum is never part of the CDC pot and therefore must be taken as a lump sum.

Personally I would rather have that 3% going into my retirement income or at least be offered the choice.

CDC and "choice" don't seem to be in the same sentence !

Isn't it the case that we will have no choice but to join the CDC scheme as the DC scheme will close.

toomuchcoke · Post by **toomuchcoke** » 01 Nov 2018, 20:09

Woody Guthrie wrote:Personally I would rather have that 3% going into my retirement income or at least be offered the choice.

Nothing stopping you from taking that lump sum at the moment of your retirement and investing it in some way (shares, BTL property, purchased life annuity, starting your own business ... whatever floats your boat) to produce additional income.