PENSION, AVC & SIPP

Hawkey99 · Post by **Hawkey99** » 29 Oct 2016, 17:17

Hi Robert,

If you have a SIPP and a RM Pension (including AVCs), When you go to take your 25% tax free lump sum would you add together your SIPP and your Royal Mail lump sum or are they completely separate entities.

Many thanks

Post by **RobertT** » 29 Oct 2016, 20:12

You can take 25% of your total RMPP + AVC’s as a tax free lump sum as mentioned in another thread, e.g:

Let’s say your total pension is £5,000 and as a section C member you also have a £1,000 supplement, plus £20,000 in AVC’s. That would give a total ‘pot’ of £140,000, giving you a max tax free lump sum of £35k.

Any other pension you may have will be treated separately. If it’s a SIPP or any other type of DC scheme then a number of different options are available. See here: https://www.moneyadviceservice.org.uk/e ... on-schemes" onclick="window.open(this.href);return false;

jetblack · Post by **jetblack** » 29 Oct 2016, 22:04

My understanding is that your total pension pot would include RMPP and AVCs plus any SIPP's you might have. And 25% of the total can be taken tax free.
On my own personal SIPP's, when I make a contribution, they (the SIPP's provider/HMRC) eventually add 20% (tax rebate) - in my retirement planning calculations I assume that this short term bonus will be deducted again when I choose to cash in. Which I, personally, will be.
You could keep the SIPP invested and just draw the income if you'd prefer though.

Post by **nataddick** » 29 Oct 2016, 22:26

My understanding is consistent with Robert's in that the RMPP scheme and separate DC schemes are treated differently. See

http://www.pensionsadvisoryservice.org. ... h-lump-sum" onclick="window.open(this.href);return false;

jetblack · Post by **jetblack** » 29 Oct 2016, 22:58

In practical terms I reckon you might as well treat the whole thing as one big pot. But yes, technically they are seperate.

I'll quote from BestInvest as that is who I have a SIPP with :-

"Under the new pension rules it is now possible to make unlimited lump sum withdrawals in excess of your 25% tax-free amount, for example to pay off a remaining mortgage. However, this will be subject to tax at your marginal rate. In the words of ex-pensions minister Steve Webb, this means you could technically withdraw your entire pension fund to buy a Lamborghini!

Although this is possible, it is not generally advisable as your pension is designed to provide an income for the rest of your life. Plus, any withdrawals in excess of your 25% amount will be taxed as income at your marginal rate."

We know the situation with Royal Mail. The above says to me that 25% of the value of your SIPP can be taken tax free (as with your RMPP), and if you choose to take the rest, rather than leave it invested, you will pay tax on it at your marginal rate. Thus the reasoning behind my last post.

Hawkey99 · Post by **Hawkey99** » 30 Oct 2016, 06:14

Thanks gents,

So generally we all agree that whilst they are both treated as separate entities, you can claim a 25% lump sum tax feee on both your SIPP and AVC.

Is that correct.

Thanks

Post by **RobertT** » 30 Oct 2016, 06:35

Ideally you want to combine the value of your main RMPP pension and AVC’s and take all of your AVC’s tax free. But as already mentioned on another thread it is possible to take your AVC pot separately(by transferring it first) but only the first 25% would definitely be tax free. The remaining 75% would be treated as income and may or may not be taxed, depending on what your total income is.

A SIPP is a completely separate entity and so again only the first 25% is guaranteed to be tax free with the rest potentially taxed.

There are a number of withdrawal options with DC pension pots that can reduce the tax you pay, this gives more info: https://www.moneyadviceservice.org.uk/e ... on-schemes" onclick="window.open(this.href);return false;

Hawkey99 · Post by **Hawkey99** » 30 Oct 2016, 09:34

Hi Robert I will hopefully be taking the full value of my AVC tax free as this will be less than 25% of the value of my RMPP and AVC combined.

Just checking my understand to previous comments that I will also be able to take 25% of the value of my SIPP as tax free also.

heapsy · Post by **heapsy** » 31 Oct 2016, 15:00

Quick question regarding AVCs. What is the contact number for starting payments if you are in the Zurich pension? Is it still done directly through the RM pension helpline? I'm getting information together to help the union rep. He admits to being clueless about pensions and with changes looming, there's bound to be a meeting at some point. Many thanks in advance.

Post by **RobertT** » 31 Oct 2016, 15:21

heapsy wrote:Quick question regarding AVCs. What is the contact number for starting payments if you are in the Zurich pension? Is it still done directly through the RM pension helpline? I'm getting information together to help the union rep. He admits to being clueless about pensions and with changes looming, there's bound to be a meeting at some point. Many thanks in advance.

The contact info for the Zurich DC pension is:

Zurich Royal Mail Service Team
PO Box 1073
Cheltenham
Gloucestershire
GL50 9NN

Email: royalmailserviceteam@uk.zurich.com

Phone: 0800 092 8263

Plan guide: https://www.zurich.co.uk/internet/works ... 714073.pdf" onclick="window.open(this.href);return false;

But if you’re in the RMPP and wish to pay AVC’s it’s:

Pensions Service Centre
PO Box 500
Chesterfield
S49 1WX

Email: pensions.helpline@royalmail.com

Phone: 0114 241 4545

Plan website: http://www.royalmailpensionplan.co.uk/" onclick="window.open(this.href);return false;

heapsy · Post by **heapsy** » 31 Oct 2016, 15:57

Cheers for that. I've started paying AVCs last year, but the rep will need all the help he can get when the bad news is broken at the meeting. I'm the only one in our office who is pro active regarding their pension, so think I need to help out if I can. Thanks once again.

Post by **RobertT** » 31 Oct 2016, 16:51

heapsy wrote:Cheers for that. I've started paying AVCs last year, but the rep will need all the help he can get when the bad news is broken at the meeting. I'm the only one in our office who is pro active regarding their pension, so think I need to help out if I can. Thanks once again.

No problem.

The lack of pensions knowledge is frightening in my opinion especially when people you expect to know about these things, don’t.
Out of around 100 at my DO, as far as I know, I’m the only one who genuinely takes interest and has realistic plans in place for their own retirement. Apart from one bloke who’s only got a few months left.
Unfortunately many people will be in for a shock when they finally take notice.

heapsy · Post by **heapsy** » 31 Mar 2017, 21:44

The last couple of weeks I have been an increased amount of AVCs. I have qualified for PSE. This week, the payments are in the right hand column and I am no longer benefiting from PSE. Any ideas why this should happen, if I WAS previously?
Week 52 of pay.

BeamishStout · Post by **BeamishStout** » 01 Apr 2017, 16:40

Out of around 100 at my DO, as far as I know, I’m the only one who genuinely takes interest and has realistic plans in place for their own retirement. Apart from one bloke who’s only got a few months left.
Unfortun

RobertT wrote: The lack of pensions knowledge is frightening in my opinion especially when people you expect to know about these things, don’t.
ately many people will be in for a shock when they finally take notice.

I know of a chap at our place who is aged about 63 and I pointed out that he needed to really consider taking NRA60 benefits NOW but I got the feeling that he just didn't have a clue what I was talking about. I fear that he did not start drawing the NRA60 benefits when they became available. Someone else today at work mentioned something about ISAs and how poor they were doing. I can only only surmise that they invested in cash ISAs. I have kept a spreadsheet track of all my ISAs (Stocks and Shares) and AVCs from the point I was able to invest. I may shortly divert some of my present stuff into more 'solid'

BeamishStout · Post by **BeamishStout** » 01 Apr 2017, 16:40

RobertT wrote: The lack of pensions knowledge is frightening in my opinion especially when people you expect to know about these things, don’t.
ately many people will be in for a shock when they finally take notice.

I know of a chap at our place who is aged about 63 and I pointed out that he needed to really consider taking NRA60 benefits NOW but I got the feeling that he just didn't have a clue what I was talking about. I fear that he did not start drawing the NRA60 benefits when they became available. Someone else today at work mentioned something about ISAs and how poor they were doing. I can only only surmise that they invested in cash ISAs. I have kept a spreadsheet track of all my ISAs (Stocks and Shares) and AVCs from the point I was able to invest and they have done very nicely in the last 2-3 years. I will shortly divert some of my present stuff into more 'solid' stuff before retirement just in case the market tanks. But even if it did, in the short-medium term I can ride it out so long as we don't get a 'Wall Street Crash' scenario