Pension advice needed regards EVR

[jcjd]

Old boy at work is 63, 20+ years service keeps himself to himself, had a soft quote a month ago didn't look like he was going to get a formal offer. The VR is back on the table, was having a chat to him about his soft quote turns out he hasn't taken any of his pension and is still in both schemes when he was entitled to his pension at 60 from the old RM pension plan.

Anyway as it stands the guy above him is waiting for his formal offer next week but I'm pretty sure he's going to turn it down so he's next in line, his offer is OK but not great would he be better of leaving both RM pension plans as quick as possible and would that generate the 104 weeks offer I seem to remember reading something about that on here.

Any advice would be usefull

[RobertT]

The MTSF agreement as we know it expired last month(May 2015) and is currently being renegotiated, so it’s all in the air at the moment. But going by the old rules what you say would be correct.

If he is still in the RMPP then he would get 26 weeks pay or statutory redundancy pay, whichever is higher. Plus his pension would be slightly enhanced.

If he were to stop his pension payments, he would get 104 weeks pay but if he took his NRA65 pension, that would be reduced for early payment.

More info here: http://www.cwule.org/Documents/MTSF%20O ... vision.pdf" onclick="window.open(this.href);return false;

I must reiterate that those rules won’t necessarily apply going forward, we will just have to wait and see what the new agreement says.

[jcjd]

Thanks for quick reply RobertT, If you were in his position as It stands you get out of the RMPP as quick as possible and or not the NRA65 to generate the 104 weeks offer. His knees are shot and I would just like him to get the best offer available

The guy above him who I believe is going to turn it down says he would delay his response to RM for the 2 weeks if he doesn't take his offer (which he won't can't afford to go, took his pension at 55 and only offered the 26 weeks) thereby giving the old boy about 3 weeks to get out of the RMPP that may be enough time

[RobertT]

Both the NRA60 & NRA65 are different elements of the RMPP, just with different normal retirement ages. So by stopping paying his pension contributions will deem him to have left the pension and will qualify him for 104 weeks pay off.

As he is 63 any enhancement to his pension would probably be fairly negligible, so in his case withdrawing from the RMPP to get 104 weeks would perhaps be a better option, although that would depend on personal circumstances.

But that is based on the rules as we know them, we don’t know if those rules will change or not as yet. So it does seem he is in a state of limbo to some extent.

[N1-22postman]

Last year I accepted VR offer of 104 weeks pay at age 63 after 37 years delivering. My first offer was for 26 weeks pay plus an enhancement of my pension (enhancement was small due to my age being less than 2 years to 65). Thanks to this forum I found out that if I came out of all royal mail pension schemes my offer would change to 104 weeks pay and no enhancement of my pension. This was a much better deal for me. It took a few weeks to stop paying into the RMPP. I took my NRA60 benefits at 60 while still working (I think your friend has lost out here as Royal Mail does not seem to be make it beneficial to defer taking NRA60 benefits) and I plan to take my NRA65 benefits at 65 (you lose 5% for every year you take it before 65).
As Robert says the rules on this may change. He will have to act quickly and contact HR to come out of all RMPP.

[jcjd]

Last year I accepted VR offer of 104 weeks pay at age 63 after 37 years delivering. My first offer was for 26 weeks pay plus an enhancement of my pension (enhancement was small due to my age being less than 2 years to 65). Thanks to this forum I found out that if I came out of all royal mail pension schemes my offer would change to 104 weeks pay and no enhancement of my pension. This was a much better deal for me. It took a few weeks to stop paying into the RMPP. I took my NRA60 benefits at 60 while still working (I think your friend has lost out here as Royal Mail does not seem to be make it beneficial to defer taking NRA60 benefits) and I plan to take my NRA65 benefits at 65 (you lose 5% for every year you take it before 65).
As Robert says the rules on this may change. He will have to act quickly and contact HR to come out of all RMPP.

I don't think he understood he was losing out by not taking his pension at 60, spoke to him today told him to contact HR to get out of the pension scheme hopefully it will go through quick enough or he will have lost out twice

[N1-22postman]

For many older postmen with a lot of service before 1st April 2010 (this is the cut off date when the NRA retirement date changed from 60 to 65) there is no advantage to not taking your NRA60 pension benefits at the age of 60. You can take your NRA60 pension and still carry on working after 60. The Royal Mail pension service told me that there would be no enhancement other than an annual increase in line with pension increase (review) orders issued by the government (based I think on RPI in September). This has been around 2% or 3% for the last few years. This is a very bad deal - compare it to not taking the state pension at 65 where the government enhance this by 10.4% for each year you do not take it.
Have I got this right? I am now 64 and have had 4 years NRA60 annual pension of roughly £36K gross (it started below £9k in 2011 and has increased (in line with RPI) to over £9k in 2015). If I had not taken my NRA60 pension at age 60 and taken my NRA60 pension at 64, I would have lost this £36K gross and started an annual pension of roughly the same amount as I receive now. This doesn`t seem right or fair?

[RobertT]

For many older postmen with a lot of service before 1st April 2010 (this is the cut off date when the NRA retirement date changed from 60 to 65) there is no advantage to not taking your NRA60 pension benefits at the age of 60. You can take your NRA60 pension and still carry on working after 60. The Royal Mail pension service told me that there would be no enhancement other than an annual increase in line with pension increase (review) orders issued by the government (based I think on RPI in September). This has been around 2% or 3% for the last few years. This is a very bad deal - compare it to not taking the state pension at 65 where the government enhance this by 10.4% for each year you do not take it.
Have I got this right? I am now 64 and have had 4 years NRA60 annual pension of roughly £36K gross (it started below £9k in 2011 and has increased (in line with RPI) to over £9k in 2015). If I had not taken my NRA60 pension at age 60 and taken my NRA60 pension at 64, I would have lost this £36K gross and started an annual pension of roughly the same amount as I receive now. This doesn`t seem right or fair?

I can understand what you’re saying but I don’t think it’s a case of it being right or fair, it’s a case of those being the rules of most if not all defined benefit schemes. In general terms taking your defined benefit pension either before or after NRA is a mistake due to the actuarial losses or as you say the loss of a few years income.

The sponsoring companies haven’t got bottomless pits of money and generally already increase DB pensions by at least inflation even for deferred members.
That’s one of the reasons so many DB pensions are now closed.

The state pension on the other hand is funded by the taxpayers of the UK and I wouldn’t be surprised by some borrowing aswell. So the government has many £Billions at its disposal and can afford to let people defer their SP and then pay them more. Although if someone defers it may also mean they’re still working and paying tax into the system, so there’s probably something in it for the government too.

[N1-22postman]

Thanks Robert for your views. I want to raise awareness through this forum what a bad deal not taking your NRA60 pension benefits at 60 is. There are probably many more postmen like "old boy" who think a pension is something you take at retirement and do not realise that they are losing a lot of money. Even if you do not need the annual pension NRA60 can provide because you are still working full time it is best to take it at 60 and just put it in an ISA until you need the money.