Lump sum entitlement

[Gus McCrae]

I seem to be getting conflicting information with regard to a lump sum payment on retirement. I started with RM in the 90's and reach 65 this year therefore I believe I'm Section C.
In a letter I've just received from the pension plan it states "A lump sum is only provided under Section A/B rules: standard benefits for Section C members do not provide for a lump sum."

On the Pension plan website it says different or am I misreading something? http://www.royalmailpensionplan.co.uk/2 ... retirement" onclick="window.open(this.href);return false;

[RobertT]

Section A/B members have a lump sum as standard under the A/B rules, but they can swap some of it for more monthly pension if they wish.
Section C members don't have the lump sum as a standard but can swap some of their monthly pension for a lump sum.

[Gus McCrae]

Thanks Robert.

[savo]

Any idea what commutation factor RM use for lump sum purposes, Robert ?

[Jefferson Starfish]

Any idea what commutation factor RM use for lump sum purposes, Robert ?

I'm sure someone will correct me if I'm wrong but I think it's 1:20. So for every £1 of pension you give up, you will get £20 added to your lump sum, upto a max of 25% of total 'pot'.

[RobertT]

You beat me to it!

[savo]

Thanks Jefferson & Robert

[standanddeliver]

I have just received my pension figures today and my commutation factor is 18.93 for some reason...? (I have heard that it should be 20 but I suppose that 18.93 is near enough)

[savo]

20 is supposed to be a "decent" commutation factor in the scheme of things.

I have read that some pension funds have commutation factor of only 12, and in this case the wise choice is to not take the lump sum, but obviously it all depends on your own circumstances and do your research etc.

[heckster]

i,m looking to retire after 35 years service. i know the larger lump sum lowers the pension. i,m 56 and looking to go soon and take my pension. anyone have any idea what my lump sum would be?

[deltaforce]

If you are in section b the it is 3/80th of your pensionable salary per year of your pensionable service as a rough guide

[heckster]

If you are in section b the it is 3/80th of your pensionable salary per year of your pensionable service as a rough guide

whats that in cash plz

[deltaforce]

Depends on what your pensionable pay is.. If you are on delivery I would hazard a guess at 22000 to 25000. Look on last years pension statement or contact pension service.

[royalmaill]

Does anybody know how to calculate how much our pension pot is??

[RobertT]

Does anybody know how to calculate how much our pension pot is??

A good rough guide is to just multiply your expected yearly pension by 20.

Section A/B members get a lump sum as standard so will need to add that on.
Section C members don’t automatically get a lump sum(it’s an option), so just use the pension figure.

You would also need to factor in the usual actuarial reduction of 5% per year if you want to know the value before either 60 or 65.