Drawdown

[Gary55]

I know that you can use 25% of the cash balance to give you a lump sum towards the nra65 pension and believe you can also drawdown another 25% taxfree from the remainder. Will we be presented with these options or have to arrange it ourselves. Also I'm not sure how we will drawdown what's left,is it left in an account we can access from royal mail or would it be transferred elsewhere. I'm aware you can buy an annuity but they have been such bad value the last few years. Would appreciate if anyone could explain it in laymans terms thanks

[RobertT]

For section A, B & C members of the RMPP, there a number of ways you can use the Cash Balance(DBCBS):

1. Use however much of it that's needed to fund the tax free lump sum when taking NRA65, with any excess being paid out as a UFPLS, which means the first 25% of that is also tax free.
2. Fund the whole tax free lump sum by commuting pension and then take the full DBCBS as a UFPLS.
3. Transfer the whole DBCBS balance to a personal pension and take upto 25% tax free and then either drawdown or buy an annuity with the remainder.
4. You may also be able to use a mixture of options 1 and 3, but you'll have to confirm that with the PSC in Sheffield.

There is no option to drawdown directly from the DBCBS. You'll have to transfer first and then set up a drawdown account with your pension provider.

I'm currently drawing down a personal pension, which includes an AVC I transferred, and the process is very easy, although the AVC transfer wasn't! They pay me an amount of my choice each month until I tell them otherwise, or the money runs out.

Annuity rates have actually increased quite a lot over the last couple of years as a result of the rise in interest rates. Although they're nowhere near as high as they were 30 years ago.

*UFPLS – Uncrystalised Pension Funds Lump Sum

[Gary55]

Thanks very much most helpful