Lump sum at 57

Daveyboy1 · Post by **Daveyboy1** » 23 Mar 2019, 09:25

I worked for RM from 1980 - 98. I am considering (due to several reasons), taking my lump sum which on the most recent RM statement is - Basic Lump sum £7,544 plus pension increase amount £4, 700 making a total of £12, 240. The current value of annual pension states £4, 80.00. I am 57, 58 in December.

I believe I can take the lump sum as above with a 25% deduction. Is that correct? Not sure what happens about the pension. Do I have to take that or can it be left to be paid monthly? when I am 60, as I am only interested in the lump sum. Not sure if apart from the 25% deduction there are any further deductions i.e. tax?

Also as soon as I contact them, how long does it take to process? I understand they will require various documentation which is not a problem.
It would be useful to know anyway whether I do take it or another time in the near future.
I have read various questions on here and looked into it as far as I can, but just wanted some simple answers if anyone can help especially if it takes a long time for the payment to be processed I can be prepared re the timeline of requesting it and actually receiving it.

Post by **RobertT** » 23 Mar 2019, 10:01

With service between those dates, you're a section B member with all your benefits having a normal retirement age(NRA) of 60.
If you want to take your pension before NRA you will face a 5% per year reduction on both the lump sum and the pension. So if you were to take it in the near future at 57.5 years old for example, that would mean a 12.5% hit.
If you take the lump sum, you also have to start drawing the pension.

Your quote will give you different options, where you might be able to take a higher lump sum & a lower pension, or vice versa.
Pensions are classed as earned income in the same way as wages are, so it may be liable for income tax, depending what your other income is.
NIC's are not payable on pension income.
The lump sum is tax free.

You'll have to contact Capita who haven't been particularly good at processing the pensions of some people, as you may have seen on this site. But they do seem to be getting their acts together.

For further reading, look at the RMPP website and the RMSPS website.

Daveyboy1 · Post by **Daveyboy1** » 23 Mar 2019, 10:11

Thanks Robert, much appreciated. You have confirmed that I can take my lump sum and this includes my small pension which I was not bothered about taking but understand you have to take both?
I know of CAPITA,but obviously thought I would call Royal Mail in the first instance? I have not seen or read that you have to contact them. I guess I would call RM line and they will tell me to call CAPITA? This is the first I have heard re calling them, fair enough.
Finally, just out of interest, I wonder how long it takes should I go through with this, how long it takes for all to be processed, a couple of month maybe? seems a long time from the initial communication. Long winded I know but just like to know where I stand.

Post by **RobertT** » 23 Mar 2019, 11:03

As a current employee who's under 55, I have no experience of how long it takes for it all to go through, perhaps someone else can confirm, or you can get info from reading various threads on here?

Capita took over the running of the pre 2012 pension benefits last year, so they're the people you need to talk to. See the RMSPS website for specific info.

Daveyboy1 · Post by **Daveyboy1** » 23 Mar 2019, 11:15

Thanks again Robert.
Anyone know how long it takes approx when you apply for taking ''early'' lump sum / pension before you get it paid ? I realize there is not a set time re Capita?

Driver74 · Post by **Driver74** » 23 Mar 2019, 11:41

Before capita took over it was about 10 weeks from start to finish but that was rm pensions at Sheffield but I’ve no experience dealing with capita

lordthornber · Post by **lordthornber** » 23 Mar 2019, 12:14

I was told by Capita to expect my quotation in mid March. This was for payment of lump sum as near as possible to my 55th Birthday on May 4th. The quote arrived on March 9th. I returned my completed documents on March 12th. I assume the next thing I will receive is an identification request letter.

So if it is paid on time, (the lump sum), it will be 8 weeks from start to finish, and just over 11 weeks for the pension. Section C member '90 to '04.

Daveyboy1 · Post by **Daveyboy1** » 24 Mar 2019, 13:59

Thanks for the replies everyone that did, very useful.

Just one more question I have thought of.
IF I or someone decides to take the lump sum and the pension as mentioned, I presume the pension will be paid each month, but will it increase each year as it does if we are already in the scheme? I have worked out the figures and of course will request a quote soon anyway. It was just a thought as I said, will there be a annual increase, although I understand either way it would be a small one.

For example if someone gets £300 a month thereabouts would it increase each year with inflation OR?
Thanks

lordthornber · Post by **lordthornber** » 24 Mar 2019, 15:43

The annual pension increase was explained in the quotation I received.

I assume the same information is available on the Royal Mail pension website.

Post by **RobertT** » 24 Mar 2019, 15:59

Your pension will increase by CPI each April, but the figures used are those for the previous September(released in October).

The RMPP website explains it in a bit more detail!