DBCBS transfer

[Hyrrokkin]

Received a reply from RMPP

"The rules regarding transfers haven’t changed at all.

As such, the previous stipulations will remain in place as this is a framework initiated by the UK Government, not Royal Mail.

Members can transfer their Cash Balance fund at any point."

So if i read that right nothing has changed ? Bit confused now

Me too!

Having done a bit more research, I think whether advice is required comes down to whether a Cash Balance scheme is classed as having safeguarded benefits, or not.

Safeguarded benefits are usually classed as DB pensions, as they promise an income based on your wages and length of service. Or DC pensions with a guaranteed annuity rate, as they're often higher than you can get on the open market.

It seems that if a Cash Balance plan is attached to a DB scheme, they probably will have safeguarded benefits. If they're not, they probably won't.
But it will come down to the individual scheme.

The RM Cash Balance scheme does guarantee a certain amount of money when taken at 65, and if used to fund the tax free cash with Age65 benefits, it's attached to that pension and so suggests it may well be safeguarded.

But someone has posted on here, saying they've managed to transfer £34k without advice.

Does this mean the OP got lucky?
Or is it a case of contradicting advice from the RMPP 'helpline'?
Either way, it's something that really needs to be clarified.

As always RobertT you are on the ball

I was thinking maybe contradicting advice - one hand does not know what the right hand is doing etc etc
Plus it is pot luck sometimes when you contact RMPP you get conflicting advice depending on who you contact.
I will contact them again so as to get clarification and i will word my email concisely so there is no room for error.
I would urge anybody else reading who is interested to do the same.

[linntroika]

I phoned pensions today and enquired regarding transferring the cash balance to a SIPP. They informed me that it is now possible without the need for financial advice if i wished to do so .
For me this is great news as i already have a Sipp and AVCs . The plan now is not to take my NRA65 until it matures and then transfer the Avcs and Cash balance to my Sipp . I take it the process at. the time of maturity would be to contact Hargreaves Lansdown and let them take care of the transfers ?( i presume there would be No financial charges for this ?)
Thanks in advance

[RobertT]

When I transferred my Bonusplan, the RMPP sent me a form to fill in and send back, and I also had to ask my SIPP provider to send some info to the RMPP.
I'm guessing the process for transferring the Cash Balance is similar?

There shouldn't be any charges, but there would be an early payment reduction if transferring the Cash Balance before 65.

The only question mark I have is whether you can make that transfer at the same time as taking your Age65 benefits, or whether it has to be done as a separate process?
Perhaps that's another phone call.....

There is no need to wait until 65 to transfer AVC's, as you can do that at any time.

[Hyrrokkin]

I phoned pensions today and enquired regarding transferring the cash balance to a SIPP. They informed me that it is now possible without the need for financial advice if i wished to do so .
For me this is great news as i already have a Sipp and AVCs . The plan now is not to take my NRA65 until it matures and then transfer the Avcs and Cash balance to my Sipp . I take it the process at. the time of maturity would be to contact Hargreaves Lansdown and let them take care of the transfers ?( i presume there would be No financial charges for this ?)
Thanks in advance

Well good news - i am waiting on a reply to confirm as well - although i am happy to leave my cash balance where it is for the time being.
As always it might be good or bad depending on your own personal circumstances.
However it is nice to have that choice.

[Hyrrokkin]

When I transferred my Bonusplan, the RMPP sent me a form to fill in and send back, and I also had to ask my SIPP provider to send some info to the RMPP.
I'm guessing the process for transferring the Cash Balance is similar?

There shouldn't be any charges, but there would be an early payment reduction if transferring the Cash Balance before 65.

The only question mark I have is whether you can make that transfer at the same time as taking your Age65 benefits, or whether it has to be done as a separate process?
Perhaps that's another phone call.....

There is no need to wait until 65 to transfer AVC's, as you can do that at any time.

It would be nice (necessary even) if they mentioned this change on RMPP website (might be wrong but i cannot see it anywhere)
Not only that but inform us if we need special forms,FAQ's etc etc

[linntroika]

When I transferred my Bonusplan, the RMPP sent me a form to fill in and send back, and I also had to ask my SIPP provider to send some info to the RMPP.
I'm guessing the process for transferring the Cash Balance is similar?

There shouldn't be any charges, but there would be an early payment reduction if transferring the Cash Balance before 65.

The only question mark I have is whether you can make that transfer at the same time as taking your Age65 benefits, or whether it has to be done as a separate process?
Perhaps that's another phone call.....

There is no need to wait until 65 to transfer AVC's, as you can do that at any time.

Many Thanks Robert

[oliviamae]

Interesting post,just a question,if I transfer my AVC to a sip
Would I get 25% tax free ? I’m in my 60s and obviously getting
My NRA 60

[linntroika]

No 25% on transferring AVCs as you have already gained tax relief on your avc pot
You can add to a SIPP and get 25% to the money you add

[RobertT]

It would be nice (necessary even) if they mentioned this change on RMPP website (might be wrong but i cannot see it anywhere)
Not only that but inform us if we need special forms,FAQ's etc etc

Yes, it would be nice if they mentioned things like this.

I think the RMPP website is very poor.

RM pensions can obviously be quite hard to understand, and they're probably just trying to cater for the majority.
But I don't see why they can't have a separate section where they go into more detail for those people who want to take more interest.
That might actually be more informative and cost effective than having a 'helpline' that gives out conflicting answers depending on who you talk to.

[RobertT]

Interesting post,just a question,if I transfer my AVC to a sip
Would I get 25% tax free ? I’m in my 60s and obviously getting
My NRA 60

When you transfer out AVC's or the Cash Balance, normal DC pension rules will apply to that money once it's in your SIPP. So 25% will be tax free and the remainder classed as income and taxed accordingly.

When considering transferring, you need to ask yourself whether it's in your best interests to do so and that will vary with the choices you make with your Age60/65 benefits and your overall individual finances.

For example: Some people will be able to take more tax free by transferring out, while others will get more tax free by taking it with their Age60/65.

Personally I moved my Bonusplan to help to fund early retirement alongside a SIPP I already had, and doing that meant I kept more of that in my pocket than any other option.
While I intend to take the full Age60/65 pensions and the best use of my Flexiplan and Cash Balance is to fund the tax free cash with them.

Make sure you make the right choice for your situation and your pocket.

[oliviamae]

Thank you for answering this
Another question is I have £26k in the flexiplan
32 ish in cash balance how would this all work
Out for Tax free amount when I reach 65 ?

[mr hil.]

I have just received both my NRA60 options and some of the cash balance can be used to fund part of the tax free pension commencement lump sum (PCLS) but it states that if I do the remainder of the cash balance May not be allowed to be transferred out at later (at NRA65)

It only says may not be so not definite but something to consider. The NRA60 lump sum amount is trivial about only £1.5K so I don't think I will risk locking the remaining £37K and risk having to pay 40% tax when I get it at 65 with my pension especially with the freeze on the 40% tax threshold as it is now.

My NRA65 will be half way through the tax year so I plan on transferring the cash balance to a drawdown SIPP and taking just enough each year to keep the tax at 20%. The news that we now don't need independent financial advice and the costs that would have incurred is very welcome news for me.

[RobertT]

Another question is I have £26k in the flexiplan, 32 ish in cash balance
how would this all work out for tax free amount when I reach 65 ?

It's a bit of a minefield, but it will depend on which option you choose when taking your Age65 benefits, and how you want to use the money.

Here are the options you'll get:
Option 1 – Unreduced pension, no tax free cash(from pension), full Cash Balance paid as UFPLS
Option 1a – Unreduced pension, no tax free cash(from pension), Cash Balance used to fund lump sum instead with remainder paid as UFPLS
Option 2 – Reduced pension in return for tax free cash, full Cash Balance paid as UFPLS

There was a recent thread covering it: viewtopic.php?f=27&t=119165

The Cash Balance is designed to be used as in option 1a, but many people go for option 2 because it provides a bigger lump sum(but less pension).
Ultimately that's a choice you make for yourself.
Personally, I see little benefit in option 1.

AVC's work in a similar way and give you similar options.
As the Cash Balance is specifically attached to RMPP benefits, AVC's are best taken with Age60, which are mainly via RMSPS.
But they can also be taken with the RMSPS element of Age65.

To work out roughly how much Cash Balance you can take tax free with your RMPP Age65 benefits, just take the figures on your last statement and multiple them by 20 and then divide by 3.

For example:

RMPP Age65 = £3,000 x 20 = £60,000 / 3 = £20,000

The remainder would then be paid out as a UFPLS

Do the same maths with RMSPS Age65 to find out how much of your AVC's can be taken tax free with that.

UFPLS = Uncrystalised Funds Pension Lump Sum – it just means the first 25% is tax free and the remainder is classed as income and taxed at your marginal rate.

Transferring out can mean different outcomes for different people.
The post above by mr hil, suggests he can avoid paying 40% tax on some of his Cash Balance by moving it to a SIPP. While for others it could mean added flexibility of drawing it down over a period of time to suit them, or even using it to fund an earlier retirement and potentially avoid paying any tax on it at all(if you keep your income below £12,570).

So when considering transferring out you need to think whether that would be better financially compared to taking one of the 3 options above. But also if you could use it to your advantage by making an important life choice, such as retiring a bit earlier than you would do otherwise.

[Hyrrokkin]

It would be nice (necessary even) if they mentioned this change on RMPP website (might be wrong but i cannot see it anywhere)
Not only that but inform us if we need special forms,FAQ's etc etc

Yes, it would be nice if they mentioned things like this.

I think the RMPP website is very poor.

RM pensions can obviously be quite hard to understand, and they're probably just trying to cater for the majority.
But I don't see why they can't have a separate section where they go into more detail for those people who want to take more interest.
That might actually be more informative and cost effective than having a 'helpline' that gives out conflicting answers depending on who you talk to.

Agree the website is poor

When did this change happen and how long have RMPP known about this - and yet no mention from them online or the pension news booklet i received last week.
Not good enough we need to know this information.
It is either careless or deliberate cannot decide which !

[Hyrrokkin]

Well received a reply from RMPP regarding cash balance transfer.

They have also confirmed you can transfer the DBCBS without financial advice if over £30,000.
(They also sent out DB transfer form for some reason - assuming i wanted to transfer - which i do not
The form was for DBCBS & NRA60 transfer - so not sure if there were another form later just for DBCBS or they assume you want to transfer both.
Was a bit confusing but no doubt me just being thick.!