Another question on taking RM pension @ 55

[arnold cheshire]

I know they are seperate. I just wish to know if I do the 50% reduction on the forecast for the NRA 65 and add the 2 pensions together to give a rough estimate.

ok its one for robert

[RobertT]

Thanks for the answer, the figure quoted would be my NRA 60 figures, the NRA 65 forecasts about another 30 grand so I assume 15 grand added to the NRA 60 of about 27 grand giving a rough total of 42 grand. There are two pension sums after taking max lump suns. NRA 60 of around 5 grand and NRA 65 arounf 3 grand, assume deduct 25% and 50% respectively and add together?? I'm not expecting to get exact figures here, just trying to understand it.

I wish they would put it in language us mortals understand.

As I said in my previous answer, the NRA65 figures assume you carry on working on your current terms i.e hours and wages, until you’re 65. So if you take your NRA65 benefits at 55(and stop paying into the pension as per the info in my link) you will get nowhere near the figures quoted.

The amounts quoted under ‘your pension’ on your statement are what you’ve actually accrued to date, so those are the figures you need to use to work out what you’re likely to get, taking into account any reductions for taking your pension early.

Personally I’m in Section C and have only accrued about £1,150 in pension and probably around £5,800 in lump sum so far in my NRA65 ‘pot’, not including the supplement(which only section c members get). If I was 55 today and took that part of my pension those figures would be halved.

These things will vary from person to person depending on which section you’re in, wages, allowances and hours worked, etc. But your figures for NRA65 will probably be roughly in the same ballpark as mine.

[Surreypostie]

I have no idea if I am in section C or not, it does list pensions supplement on my forecast for NRA 60 and NRA 65, would you get that supplnment if you carry on working or only if you leave?

I just read your link and am still quite confused.

Thanks for your time taken to answer Robert.

[RobertT]

I have no idea if I am in section C or not, it does list pensions supplement on my forecast for NRA 60 and NRA 65, would you get that supplnment if you carry on working or only if you leave?

If you get the pension supplement it sounds like you’re in section c. But it will say on the front of your statement which section you’re in and also on your wage slip you should have a deduction under ‘RMPP C EE’.
The supplement is only payable until your state pension age and only if you leave RM.

I just read your link and am still quite confused.

A lot of the info given in the statement and the various downloads is quite hard to understand which isn’t helped by the changes made to the pension scheme over the last few years. My advice would be to persevere and read it over a few times and it will slowly come to you.

Thanks for your time taken to answer Robert.

I hope I’ve been some help.

[Surreypostie]

You have, I now know I am in Section C. I now understand my options having read the link on flexible retirement a few times. I think whatever I decide taking the whole lot early may not be a wise option as too big a hit on the NRA65 bit.

Thanks again for your help.

[RobertT]

You have, I now know I am in Section C. I now understand my options having read the link on flexible retirement a few times. I think whatever I decide taking the whole lot early may not be a wise option as too big a hit on the NRA65 bit.

It will always depend on circumstances but taking any pension early is generally not a good idea, especially when you stand to lose so much.

Thanks again for your help.

Not a problem.

[heapsy]

Been reading with interest, the many posts on here regarding pension and the various options. Seems to me that many of you are in section C as I am and will be faced with the prospect of losing your supplement if you go on until 65 or taking a hit on the NRA 65 pension if you go early, just so you can get the supplement. Let me give my thoughts, if I may, to help clarify things. When I get to 60 I will have just short of 39 years service. This will be split almost 50/50 between the NRA 60 and NRA 65 pensions. Now I know everybody has slightly different situations but I am sure those of you in delivery will be thinking blimey! another 5 years of this? I decided to do something about it and save into cash ISAs and invest in a Stocks and Shares ISA which can be taken as cash. Gains taken tax free, or the dividends taken as an income, although you would need a sizeable fund to give you a decent income. The main point of my post is, be careful about taking your pension early. Robert T is right, your pension is for when you retire, not before. If you take it early you will have a reduced pension which will in effect lose pace with the cost of living, the longer you live. Unless you really are sure you wont live long, through ill health or poor living this could be very costly. Take a look around you, there's loads of people out there pushing 80 and beyond. I intend to leave my NRA 65 pension where it is and use the cash from the sale of shares, savings and my stocks ISA to fund the gap. I may take a part time job. You could use a Stocks and Shares ISA in the same way you might use the AVCs from work, enabling you to take a larger pension which will grow by a greater amount the longer you live. This would be ideal if you finished at 60 and took the supplement. You might want to take a part time job, AWAY from RM so you get the supplement and wait for the NRA 65 pension? Whatever you decide, think carefully. Ask yourself this question; why did I start a pension? It is not a bank account to dip into when you are strapped for cash. If you in that position then you need to address the issue and don't go for the quick fix. Sorry if this sounds like a rant, it isn't meant to, remember you don't want to retire and be skint after a few years because you got it hopelessly wrong. You never know, you could be one one those 80 years plus pensioners one day.

[RobertT]

Well said heapsy! I think the problem with pensions or retirement saving in general, is that people tend not to think too much about it until they’re knocking on a bit, and they then end up making poor decisions.

There seems to be a lot of people on this forum who are determined to take their RM pension at 55 regardless of whether it’s the best thing to do or not. There may be health reasons why it could be good for some and I understand the benefits of taking your pension and going part time and keeping a similar income. But the main aim of a pension is to replace your wages when you give up work, so by taking it early you’re potentially forcing yourself to work longer, albeit part time, and making yourself worse off in your dotage when you’re less able to do anything about it.

I agree that there’s more to saving for your retirement than just having a pension. But you should always take the maximum that’s on offer from your employer, so always join their pension scheme especially if it’s a defined benefit one such as a final or career average pension. And always pay in as much as it takes to get the maximum employer contributions from a defined contribution scheme.

Pensions will give you those valuable employer contributions and tax relief but tend to be inflexible as to when you can take them. ISA’s on the other hand won’t benefit from any ‘free’ money but can be dipped into at any time so are more suitable for funding an early retirement.

The important thing with your retirement planning is to be proactive from as early an age as possible. I appreciate that the average 20 year old in their first job probably won’t be too interested in what they’re going to live on when they’re 70 and I know everyone’s got bills to pay and kids to feed, etc. But you don’t stop having bills to pay when you’re older and the sooner you start, the better off you’ll be in the future.

My advice would be to take a look at your last RM pension statement and any other pension statements you may have, and ask yourself whether you can afford to live on what they will pay out at the age you want to retire. If not, do something about it.

Also get yourself a state pension statement to see what you stand to get from that when the time comes. There’s nothing to say that the state pension will pay enough to live on in itself, that will depend on circumstances. But the age at which you can claim it is going up so if you want to retire before that age, ultimately it’ll be up to you to make sure you can.

[stroller]

RobertT

I am just paying into my RM pension and nothing else, if I wanted to invest say £400 per month into something else to supplement my pension, what would you suggest?

[RobertT]

RobertT
I am just paying into my RM pension and nothing else, if I wanted to invest say £400 per month into something else to supplement my pension, what would you suggest?

That would depend on a number of things, for example:

Your age.
At what age you plan to access the money.
Your objectives for the money.
Your risk profile, i.e would you want to just save in a cash account or in high risk equities.

I don’t think it’s wise of me to suggest anything specific but here are some possibilities:

AVC’s: have the benefit of receiving tax relief and you can use them to provide some or all of your tax free lump and therefore increase your pension income. Or just buy an annuity. But the investment choice is limited. Min age 55 but ideally at 60 when you take your unreduced pension(NRA60).

A pension away from RM: would benefit from tax relief and a larger choice of investments but tax free element could be just 25% depending on how you choose to access it. An annuity is an option but rates are low. Min age 55.

Equity ISA: offers similar investment choice to above but doesn’t attract tax relief and can be accessed at any age.

Cash ISA or other cash savings: The safe option, no tax relief, probably low interest rates but can be accessed anytime.

Don’t think you have to put all of your money in one place. Personally I’ve got all four of the above, all aimed at doing slightly different things at different times.

[stroller]

RobertT,

Thanks for the info, very good info as always