NRA60 and NRA65

[Downeagle]

Two guys in my office who intend to work till they are 65 have received NRA60 forms with 2/3 options and have asked:

1) Is there any benefit in deferring their NRA60 option till later I.e.Aged 65?
2) they will receive a separate NRA65 when they reach 65? Again with options?

I am aware that changes are afoot come 2018

Thank you

[RobertT]

Two guys in my office who intend to work till they are 65 have received NRA60 forms with 2/3 options and have asked:

1) Is there any benefit in deferring their NRA60 option till later I.e.Aged 65?

The optimum age is 60. So if you take it early it gets reduced and if you take it later it doesn't increase, other than by inflation. However pension income is potentially taxable in the same way as income from your wages, so if they carry on working(presumably full time?) their pension will see a 20% Income Tax hit. However National Insurance is not payable on pension income.

2) they will receive a separate NRA65 when they reach 65? Again with options?
I am aware that changes are afoot come 2018

The NRA60 element relates to service up to April 2010 and the NRA65 is after that. As the scheme looks likely to close in 2018, the maximum NRA65 pension anyone will accrue is only going to be 8 years. Yes, they will get similar options at 65.

They will also have some Defined Contribution pension from 2018 until 65, although as it's a completely different kind of pension, the options will be different aswell.

[Downeagle]

Thank you for your r response Robert, with regard to NRA60 then if they are 60 and take one of the options they will pay 20% tax on their income but if they decided to defer till 65 would that mean they would be denying themselves of 5 years pension and losing out?
I presume inflation would be accrued whether taken or not?

Thanks again.

[RobertT]

Thank you for your r response Robert, with regard to NRA60 then if they are 60 and take one of the options they will pay 20% tax on their income but if they decided to defer till 65 would that mean they would be denying themselves of 5 years pension and losing out?

Yes.
Assuming their income from their wages is over the personal tax allowance of £11,000 per year, then they will pay tax on all of their pension. Not counting any tax free lump sum they take.

So for example, if their pension is £10,000 per year, they would pay income tax of 20% leaving a net amount of £8,000.
However if they defer their NRA60 pension until 65 they’ll be depriving themselves of that £8k per year, which they’ll never get back. So over those 5 years they’ll be losing £40,000 net (£50,000 gross).

I presume inflation would be accrued whether taken or not?

You presume correctly.

[Downeagle]

Thanks again Robert

[Downeagle]

I have forwarded on the information I gained from here to the guys concerned and although the letter is relatively clear and the advice is to to seek professional opinion if required one of the guys who has no other benefit entitlements to be considered was going to select the NRA65 option as he thought this allowed him to work on till 65 and taking the NRA60 did not. Having read the relevant passage in the accompanying booklet reasons for not taking the NRA60 at 60 would be if other benefits would be if it put the claimant at a loss. I also rang the Royal Mail pension helpline and they have a non commital guide when asked for advice I'm sure it's because they would have to know each claimants circumstances, still this guy was about to make a big personal blunder (£10k per year).

[heapsy]

I have forwarded on the information I gained from here to the guys concerned and although the letter is relatively clear and the advice is to to seek professional opinion if required one of the guys who has no other benefit entitlements to be considered was going to select the NRA65 option as he thought this allowed him to work on till 65 and taking the NRA60 did not. Having read the relevant passage in the accompanying booklet reasons for not taking the NRA60 at 60 would be if other benefits would be if it put the claimant at a loss. I also rang the Royal Mail pension helpline and they have a non commital guide when asked for advice I'm sure it's because they would have to know each claimants circumstances, still this guy was about to make a big personal blunder (£10k per year).

The NRA60 and NRA65 pensions have nothing to do with each other. Sadly this is yet another example of people not taking any notice of information they are given. Regardless of if someone works until 65 or not, they should always take their NRA60 pension at 60. Why would anybody not want to? You cannot back date a claim for money not taken. The only problem is the issue of whether someone is in section C of the pension or not. IF they are, then they will NOT receive the pension supplement that comes with the NRA60 pension, this is only paid if you leave the business. However, they will still be contributing to the NRA65 pension. Tbh this lack of knowledge is frightening. It makes me wonder how many people out there DO NOT read the information they receive or realise that the state pension age is rising. The two are completely separate things. It is my belief that many wrongly believe that when they get to 65 that they will get the state pension, as they did before. This means that they probably think they will be financially secure so don't need to put more money away. The other issue is an historical one. I still hear people go on about dying not many years after retirement, as many used to do. This, for many is no longer the case. However, this still persists and so many do not think it is worth putting money away for retirement. I also believe that this is why people are talking about taking their pension early. They see their pension like a bank account, with a sum of money in it. This makes them think that if they take it early, they will some how beat the system because they are drawing their pension for longer, so they think they will be better off. This is because they do not believe that if you take your pension early, it is REDUCED pro rata for early payment. They actually believe it is a pot of money and if they don't take it when they can, it will be left behind when they die. Also, many don't sit down and consider how much they might need as an annual pension. They have no idea because they only see their weekly/monthly income and have no idea about how it will reduce when they take a pension.

[Hawkey99]

Im section C and on my statement it says I receive a pension supplement at 60. ??

[RobertT]

Im section C and on my statement it says I receive a pension supplement at 60. ??

If you’re in Section C and you take your pension and leave the business you will get the supplement until state pension age.
If you take your pension and continue working, you won’t get the supplement.
If you take your pension early and leave, the supplement will be reduced in the same way as your main pension, i.e by 5% per year.

Section A/B members do not get a supplement, but as their pension is better they don’t need one.

[Downeagle]

I learned today that a colleague in our small office who is 62-63 hasn't taken his NRA60 as yet. When he sought advice from elsewhere he was told that if he didn't need to take it he would be better off when he was 65. Surely he has been given poor advice (neither he nor his wife receive any benefits).
In certain circumstances the advice may of been correct but as has been said previously we have 2 (at the moment) pensions NRA 60 and 65, if it had still been the one then yes but we are not contributing to the NRA 60 any more.
Even our area manager has advised when asked recently by colleagues leaving pensions till 65?
I myself get confused between the terms Sections A, B & C and read the information avidly, probably because I am nearing 60.
Is there a CWU pensions adviser that could be approached as these guys must be common place amongst staff, it's okay to say they should be more savvy but they are not and Royal Mail have a non advisory/comittal approach.

[heapsy]

I learned today that a colleague in our small office who is 62-63 hasn't taken his NRA60 as yet. When he sought advice from elsewhere he was told that if he didn't need to take it he would be better off when he was 65. Surely he has been given poor advice (neither he nor his wife receive any benefits).
In certain circumstances the advice may of been correct but as has been said previously we have 2 (at the moment) pensions NRA 60 and 65, if it had still been the one then yes but we are not contributing to the NRA 60 any more.
Even our area manager has advised when asked recently by colleagues leaving pensions till 65?
I myself get confused between the terms Sections A, B & C and read the information avidly, probably because I am nearing 60.
Is there a CWU pensions adviser that could be approached as these guys must be common place amongst staff, it's okay to say they should be more savvy but they are not and Royal Mail have a non advisory/comittal approach.

There is no logical reason not to take your NRA60 pension at 60. You cannot back date the payments so they are now lost. The only issue surrounding the pension, is if the member is a section C member. That is, someone who joined RM any time from 1st April 1987, up until 31st March 2008. This is because there is a supplement attached to the pension. However, this is only payable IF the member leaves service at age 60. It would be lost if they continue working for the business. There are no circumstances where it would be advisable not to take the pension at 60, it is pension worked for, and some may like to take it a little easy by cutting back or even ceasing to perform overtime, as they may no longer need to. If you are approaching 60 then you also need to contact the pension centre and get the ball rolling to take your NRA 60 pension. This is even if you continue working for RM. You can STILL pay into the NRA 65 pension, it is completely separate, and would help to offset the loss of the pension supplement, if you are entitled to one. I don't know when you started, so cannot tell you if there is one. Look at you statement, it will tell you there. Hope this helps. I have noticed a trend on these threads which, sadly, indicate people are not reading their statements. It really is important to get to grips with them, as not doing so can be costly. As is the case of your colleague. BTW, a former colleague of mine very foolishly did the same thing. He is very blinkered about such things and as a result of not wanting to talk about something that in his view was a private matter, it cost him dearly. The advice your colleague received from the manager is completely WRONG. I think the issue surrounding taking your pension stems from a misguided belief that you have to retire, in order to take your pension. That used to be the case, but not any longer. Sorry if it sounds like a rant, it isn't meant to, but I hope it helps.

[Downeagle]

I appreciate your response heapsy and will help me in the future but presently whilst I don't like to be the only guy in the office that takes an interest in such matters and shares the info I cannot deny these guys the benefit of the knowledge I gain from from this website and I do pass on the credit though there is not much interest from where it comes from.
My colleague I have just mentioned has 40+ years service and like your colleague it is deemed a private matter and advice will need to be passed on carefully.
I'll need to re read this a few times, it'll sink in, thanks again.

[RobertT]

I learned today that a colleague in our small office who is 62-63 hasn't taken his NRA60 as yet. When he sought advice from elsewhere he was told that if he didn't need to take it he would be better off when he was 65. Surely he has been given poor advice (neither he nor his wife receive any benefits).
In certain circumstances the advice may of been correct but as has been said previously we have 2 (at the moment) pensions NRA 60 and 65, if it had still been the one then yes but we are not contributing to the NRA 60 any more.
Even our area manager has advised when asked recently by colleagues leaving pensions till 65?
I myself get confused between the terms Sections A, B & C and read the information avidly, probably because I am nearing 60.
Is there a CWU pensions adviser that could be approached as these guys must be common place amongst staff, it's okay to say they should be more savvy but they are not and Royal Mail have a non advisory/comittal approach.

As far as I’m aware the CWU don’t give out pensions advice, and the reps in my office over the years have proved to be totally clueless when asked.

If you want proper advice then a local IFA is your best point of call, although their charges will probably be more than you might expect.

This website is a good place to start to find an IFA: https://www.unbiased.co.uk/" onclick="window.open(this.href);return false;

[heapsy]

Try these http://www.pensionsadvisoryservice.org.uk/" onclick="window.open(this.href);return false; and https://www.pensionwise.gov.uk/" onclick="window.open(this.href);return false;