65 Pension

[Ematt]

Hello there, I,ve just received my paperwork for my RMPP 65 pension ( I,m still with RM and started in March 1987) and was a little surprised to see "none" in three of the 5 options regarding "tax free cash" and "from your cash balance". I have already taken a 40 grand lump sum, plus annual, with my 60 pension. Does this mean I will not be getting more lump sums from my 65 pension ?

Cheers

[tractorboy2]

I recently had mine and chose option 1a , if you want more lump sum chose one of the other options but bare in mind the whole of your cash balance will be taxed , which is why it says none. The cash balance is there to fund the tax free element , and leave you with more pension.
I was in Section C though. It's possible you may be in section B if you started in '87.

[RobertT]

Hello there, I,ve just received my paperwork for my RMPP 65 pension ( I,m still with RM and started in March 1987) and was a little surprised to see "none" in three of the 5 options regarding "tax free cash" and "from your cash balance". I have already taken a 40 grand lump sum, plus annual, with my 60 pension. Does this mean I will not be getting more lump sums from my 65 pension ?

Cheers

It sounds like you scraped into section A/B.
Anyone joining from April 1987 would be section C, until that closed to new entrants in 2008.

As a section C'er myself I'm not as informed on A/B, but as you have a standard lump sum that means you have more options. Such as increase it in return for a lower pension, or vice versa.

If you tell us what your 5 options actually are, or perhaps upload a photo, we can tell you what each one means and how they relate to your Cash Balance.

[Ematt]

IMG_20260809_144242.jpg

[RobertT]

Option 1 – standard pension + standard lump sum, with the full Cash Balance being taken as a UFPLS.
Option 1A – standard pension + standard lump sum + with an amount of Cash Balance making the tax free cash up to 25%. With the remainder of the Cash Balance being taken as a UFPLS.
Option 2 – reduced pension + max 25% tax free cash, with full Cash Balance as a UFPLS.
Option 3 – give up standard lump sum for a higher pension, full Cash Balance as UFPLS.
Option 3A – give up standard lump sum for higher pension + an amount of Cash Balance funding the 25% tax free cash, with the remainder paid as UFPLS.

UFPLS stands for Uncrystalised Funds Pension Lump Sum – it simply means 25% of that is also tax free, with the remainder classed as income and taxed accordingly.

If you didn't take any Cash Balance with your Age60 benefits, you also have the option to transfer the whole amount out to a personal pension.

I hope that helps.

Which option you choose usually comes down to whether you value a higher index linked income for life, over a higher one off lump sum.
That will be an individual choice for you!

[Ematt]

Thanks for taking the time to explain that, much appreciated. As far as I can remember, I did,nt touch the cash balance at 60, just the biggest available lump sum and smaller annual.

[Ematt]

Whoops, just checked my age 60 paperwork and I did take £600 from my cash balance fund.

[Ematt]

Apologies for keeping this thread still going. But I spoke to RMPP today and was told the rule about not being able to transfer the cash balance fund, if you had already used some it when taking your aged 60 pension, had been recently changed. On a previous call, I was told the opposite. So I,m awaiting clarification.

[mr hil.]

Please keep us updated, I opted to not touch the cash balance fund at age 60 just in case it "locked it in" as was mentioned on my option forms. It was only a difference of about £1K so not worth the risk.

I will be transferring mine out to a private SIPP to avoid paying the 40% tax that will be payable on any income over the standard tax threshold (£51K ish) triggered by receiving such a large cash payment of the UFPLS with only 25% tax free whilst still working and receiving both NRA60/65 pensions.

By transferring out I can take out smaller amounts at a time that suits me with the plan to keep away from the 40% tax threshold in each subsequent tax year. ( not financial advice from me but advice given to me that makes the most tax efficient use of the money available to us) When I retire at 67 my annual income will drop so that is when I will drawdown the Cash Balance Fund but keeping it at max 20% tax

[Ematt]

Hello there, spoke again today with the people at RMPP and I definitely can't transfer my cash balance out, because I took a little but if the cash balance at age 60. A bad mistake. As I intend to retire from RM next Spring or summer, it may be worth doing a few sums and seeing if its worth deferring my pension a few months into the next tax year, and taking a hit on losing the annual for a few months. May work out better than paying 40% tax in November.

[mr hil.]

It all depends on how much taxable income you have this year and how much headroom you have before you reach the £51K threshold.

If this years taxable income (including your current and future pension payments) + the left over cash balance after deducting the 25% tax free amount does not push you over the 40% tax threshold then take it as normal. By deferring it until next April you will be missing out on roughly £192 (£154 after tax) per month deferred, but you could gain from any annual increase applied to the cash balance in April possibly by at least 3% (projected RPI figure for next September).

20% tax on your residual cash balance could be £3700 ish, doubled if taxed at 40%.

Not advice just my musings, my mind just likes churning figures, my wife hates it when I talk finances to her
I guess I am a NEEK (combination of a Nerd and a Geek)