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Collective plan lump sum
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Wullie10
- EX ROYAL MAIL
- Posts: 662
- Joined: 30 Jul 2017, 12:07
- Gender: Male
- Location: Retired
Collective plan lump sum
The collecetive plan forecast gives two figures. One an annual amount and one a lump sum . If you've already taken the NRA60 and the NRA65 how much of the NRA67 lump sum would be tax free ? What would happen to the remaining amount ? A taxable lump sum or could it be used to obtain a bigger annual income ?
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RobertT
- EX ROYAL MAIL
- Posts: 6548
- Joined: 09 Sep 2007, 14:26
- Gender: Male
Re: Collective plan lump sum
You're usually allowed to take up to 25% of each pension you have as tax free cash. So the fact you've already taken your Age60 & Age65 or any other pensions, isn't relevant when you come to take your RMCPP benefits.
The only caveat being there's currently a maximum tax free lump sum limit of £268,275 from all your pensions. Which won't be a problem for the vast majority of posties.
How much of the RMCPP lump sum will be tax free will depend on how they work out the value of the pension. Which the haven't divulged as far as I'm aware.
With a DB scheme, the usual way of working that out is to multiply the yearly pension by 20.
While the RMCPP is trying to replicate the benefits of a DB pension, it clearly isn't the same, so the method for working it out will be different.
My guess is that the majority if not all of your lump sum(inc the booster) will be tax free, with any excess being paid out as a UFPLS(25% of that also tax free).
It's not possible to convert your lump sum into more pension via the RMCPP, but you can transfer out the whole amount(inc booster) to buy an annuity if you choose.
The only caveat being there's currently a maximum tax free lump sum limit of £268,275 from all your pensions. Which won't be a problem for the vast majority of posties.
How much of the RMCPP lump sum will be tax free will depend on how they work out the value of the pension. Which the haven't divulged as far as I'm aware.
With a DB scheme, the usual way of working that out is to multiply the yearly pension by 20.
While the RMCPP is trying to replicate the benefits of a DB pension, it clearly isn't the same, so the method for working it out will be different.
My guess is that the majority if not all of your lump sum(inc the booster) will be tax free, with any excess being paid out as a UFPLS(25% of that also tax free).
It's not possible to convert your lump sum into more pension via the RMCPP, but you can transfer out the whole amount(inc booster) to buy an annuity if you choose.
Links to all RM pension related websites are here