Pension Query

[The Quiet Man]

Hi, I wonder if any of you knowledgeable folks can help me?

I took EVR from Royal Mail around 16 months ago after 33 years service - Luckily, I found another job fairly quickly!

The new Company is in the Oil & Gas Sector and their Pension Terms were quite simple to understand, I could contribute anything up to 8% of my Monthly wage and they would match it. (I am paying the full 8%)

Can anyone tell me if my contributions to Royal Mail were on a similar scale? (I thought I was there for life and took no interest in such matters)

I'm 55 in just under 3 years and wonder what sort of figure I'd be looking at if I chose to take 25% of my Royal Mail Pension Pot - is anyone here able to give me an approximate figure, even if it's the lowest figure they can guarantee me receiving?

I also have the option of moving the Royal Mail Pension Pot into my new scheme - would this be worth considering?

Any information or advice would be appreciated.

TQM

[heapsy]

Do you still have your last pension statement from RM? Most of your pension will be in the NRA60 pension, with a small amount having been built up in the NRA65 pension. If you took the NRA60 pension it would be subject to a 25% reduction for early payment. Anything in the NRA65 pension, the career average scheme introduced I think around 2008 would be subject to a 50% reduction for early payment. TBH I would think very carfuly about transferring to the new employer pension. Why would you want to receive you pension LATER in life? You could leave it invested and then take it at 60 without loss. (This might enable you to avoid doing overtime as you will be getting a payment from RM.) Leaving the NRA65 pension until 65, again without loss. As you are working there doesn't seem to be an urgent need for money from the pension. Remember a pension is really meant to provide for when you are no longer working. Taking a pension early WILL mean a lower income when you do retire, than you would have without the reduction.BTW, what is the pension age of your new employers scheme? Be aware that THIS could be moved to a late date, although anything you paid in/ transferred in before that date would be protected under the current scheme rule on pension age. Also bear in mind the tax implications. Would taking the pension early push you into a higher tax band, meaning more tax to pay? I don't know the answer to that one as I have no idea what your earnings are. I hope this helps. A million and one things to think about but only you can really decide. Do bear in mind my last comment about having a reduced pension when you do eventually retire. So many on here seem to be worrying that they are going to die very soon and they need to get money from the pension ASAP. The fact is that this is happening less and less, which is fortunately or unfortunately, depending on how you look at it a good thing. Don't leave yourself skint in older age. You might be able to take the NRA 60 pension at 60 and put the money into AVCs. Not 100% sure on this so you would need to check, if you can then that would avoid paying tax on the pension you received. Just a thought. Good luck with it and let us know, any info shared helps everybody.

[RobertT]

The new Company is in the Oil & Gas Sector and their Pension Terms were quite simple to understand, I could contribute anything up to 8% of my Monthly wage and they would match it. (I am paying the full 8%)

Sounds like a defined contribution pension to me where your two lots of 8% and the tax relief are put into a pot and invested into the stock market etc.

Can anyone tell me if my contributions to Royal Mail were on a similar scale? (I thought I was there for life and took no interest in such matters)

The RM pension you were/are in is a defined benefit scheme (section A/B) where you build up pension based on your wage and length of service. The employee contribution is 6% and has been for many years, while RM puts have to put in as much as it needs to keep the scheme solvent and be able to pay its liabilities. Although the government took over the vast majority of those liabilities a few years ago.

I'm 55 in just under 3 years and wonder what sort of figure I'd be looking at if I chose to take 25% of my Royal Mail Pension Pot - is anyone here able to give me an approximate figure, even if it's the lowest figure they can guarantee me receiving?

As Heapsy says, take 25% off the NRA60 figure on your last statement and 50% off the NRA65 amount and you won’t be too far off.

I also have the option of moving the Royal Mail Pension Pot into my new scheme - would this be worth considering?

If your new scheme is defined contribution, then it’s definitely not a good idea as your RM pension gives you guaranteed index linked income for life at very little cost to yourself. Transferring to a DC scheme will mean throwing away those guarantees and putting your faith in the stock market and you’ll almost certainly have a poorer old age as a result.


I totally agree with Heapsy when he says a pension is there for your old age when you stop working and not to supplement your income beforehand. In my opinion, far too many people are taking their pensions early and will live to regret the decision later in life. Although I fully except it’s always going to come down to personal circumstances.

[The Quiet Man]

Thanks Guys, I appreciate you taking the time to reply!

I'll get the wife to try to source my last Pension update and have a look.

You're correct about Personal Circumstances probably dictating the decision at 55 so I'll cross that bridge when / if I reach it!

Thanks again!

TQM