Lump Sum

[Omega853]

From your annual pension statement how can you work out what your 25% tax free lump sum would be please ?

[ANDREW CROCOMBE]

Too confusing for me, but i took my 60 pension a year ago (30 yr service) and got around £24 grand with a monthly £300 near enough.

[heapsy]

Look at the large figure on the Statement.Divide that by 4. That gives you 25% or a quarter. That will be your lump sum. Depending on when you joined, will determine which pension you are in. So you may have more than one statement. If you do, then add both figures ie, NRa60 from two statements. Same with the NRA65. Then divide that figure by 4. Remember to add your AVCs to the equation if you have any, before doing the above calculation.
My NRA60 is about £160,000. I have also got just short of £42,000 in AVCs. My lump sum for the NRA60 is about£50,500 as it stands.

[grchpo]

Thought I heard some where you have to multiply by 20 ???

[heapsy]

That is doing it in reverse so to speak. On the statement it should have a total figure. Quite a large number if you have been contributing for a while.

[RobertT]

From your annual pension statement how can you work out what your 25% tax free lump sum would be please ?

Assuming you have benefits with the RMSPS & RMPP, then the formula on page 12 of the RMPP 'member guide to benefits' will give you a good ballpark figure of how much lump sum to expect. It does require having to multiply your pension by 20!
It's best to do your calculations for NRA60 and NRA65 separately, and both RMSPS & RMPP statements will have figures relating to NRA60 & NRA65.

That guide can be found here: https://www.royalmailpensionplan.co.uk/ ... a-library/
There's also a few other guides and videos which might help you to understand things a bit better.

AVC's and the DBCBS make the calculations a bit more difficult, particularly as the DBCBS is predominantly to be paid out with NRA65.

If you do have AVC's, a more accurate way of working out the 25% tax free cash amount would be to multiply your pension by 20 to get your pot value. If you then assume that is 75% of your total benefits, the maximum tax free lump sum possible without giving up any pension, would be the other 25%.

I haven't got a clue which 'large figure' heapsy is referring to, as there is no such amount on either RMSPS or RMPP statements, and from memory no previous statement has included such a figure either.

*If you're actually in the RMDCP with Scottish Widows, which anyone who joined RM after April 2008 probably will be. Then all you need to do to find out the maximum tax free lump sum, is to divide the value of your pension pot by 4.

[NorthernBoy]

Just checked the guide for how the 25% lump sum is calculated and it states that the pension supplement is included in the calculation method.

I seem to recall that someone on here said that the supplement was not included, but this is not correct.

[RobertT]

My personal understanding, is the supplement is included for lump sum purposes if you've already left or are planning on leaving upon taking your benefits.

It's not included if you're still in RM employment.

Although, to be honest I'm not 100% sure?

[NorthernBoy]

My personal understanding, is the supplement is included for lump sum purposes if you've already left or are planning on leaving upon taking your benefits.

It's not included if you're still in RM employment.

Although, to be honest I'm not 100% sure?

Yeah the confusion about its inclusion may be to do with whether you have left the business or not. The guide clearly states it’s included though.

[heapsy]

My personal understanding, is the supplement is included for lump sum purposes if you've already left or are planning on leaving upon taking your benefits.

It's not included if you're still in RM employment.

Although, to be honest I'm not 100% sure?

Wrong. The supplement isn't included, it is added after.

[mark.cup]

It's shocking that in this day and age there are so many bits like the the supplement and AVC's that don't get accounted for.......

How do they expect people to make a well informed decision about if they can or can't afford to retire!

[mark.cup]

[heapsy]

It's shocking that in this day and age there are so many bits like the the supplement and AVC's that don't get accounted for.......

How do they expect people to make a well informed decision about if they can or can't afford to retire!

The supplement came in when they watered down the FS pension in 1987 (section C). Doesn't compensate us for it being inferior to section B. To add insult to injury, we stopped accruing the supplement when the government increased the state pension age.

[RobertT]

Wrong. The supplement isn't included, it is added after.

What's wrong is the fact that we get conflicting information!

The guide to benefits clearly says the supplement is included when working out the max tax free lump sum. Yet you've been told verbally(?) that it isn't.

I can understand there being a difference between employee and deferred members. But it still should be a simple yes or no!

My personal experience of contacting the PSC in Sheffield hasn't been that great over the years, and have found them to be lacking in knowledge of the finer points of our pensions.
The 'is the supplement included or not debate' doesn't exactly improve that!

[RobertT]

The supplement came in when they watered down the FS pension in 1987 (section C). Doesn't compensate us for it being inferior to section B. To add insult to injury, we stopped accruing the supplement when the government increased the state pension age.

Section C members stopped building up pension supplement because the RMPP closed to future accrual in 2018.