Couple of Questions Please

[Hawkey99]

One of my colleagues has asked me if someone could answer the following please.

Once you are 60 and take your pension would you still pay in contributions. I assume they would collect their NRA 60 pension and still be paying into the NRA 65 pension and next year into the new scheme. Is this correct

Another person has paid in contribution for 42.5 years. What is the maximum length of time he can pay contribution in. He has been advised the maximum time he can make payments in is 45 years.

Many thanks

[RobertT]

One of my colleagues has asked me if someone could answer the following please.

Once you are 60 and take your pension would you still pay in contributions. I assume they would collect their NRA 60 pension and still be paying into the NRA 65 pension and next year into the new scheme. Is this correct

Yes that's correct.

Another person has paid in contribution for 42.5 years. What is the maximum length of time he can pay contribution in. He has been advised the maximum time he can make payments in is 45 years.
Many thanks

The maximum number of years you can pay into the current DB scheme is 45 years. But as that’s expected to close to future accruals in 2018 and be replaced by a DC scheme, I’m not sure whether the 45 year rule would still apply. I would think not, but that’s just my opinion so I would suggest a call to the consultation helpline might be in order: 0345 850 0081

[Hawkey99]

Many thanks.

I assume then that it may be possible to may into the DC new scheme indefinitely...

Thanks again

[RobertT]

Many thanks.
I assume then that it may be possible to pay into the DC new scheme indefinitely...
Thanks again

The rules of the current DC scheme(RMDCP) are that you can opt into it anytime up to age 74. That may well be the case for the 'new' DC scheme too, but as we don't know the finer points of it yet, we can't say for sure.

But I would assume as long as you're employed by RM you'll be able to pay into it.

[cloherty1976]

Do you think the £750 is really a good idea on managements side as I suppose it would only be worth about 50p a week in your pension but if your young or not thinking of being with Royal Mail for a long time I suppose you could have £500 in your wage packet. I think I would pick the money in my pocket rather than waiting years for a few pence. Maybe my calculations are a little out but maybe someone might know better?

[RobertT]

Do you think the £750 is really a good idea on managements side as I suppose it would only be worth about 50p a week in your pension but if your young or not thinking of being with Royal Mail for a long time I suppose you could have £500 in your wage packet. I think I would pick the money in my pocket rather than waiting years for a few pence. Maybe my calculations are a little out but maybe someone might know better?

£750 is a pittance in pension terms and only relates to about 4 months’ worth of RM contributions at 10% of basic pay. It will go only a very small way to making up for what we’ll lose by the closure to future accruals of the current DB pension.

You are correct that if you were to buy an annuity with your £750, it wouldn’t get you very much – possibly even less than your 50p per week guess! But you don’t have to buy an annuity! As I suggested here: http://www.royalmailchat.co.uk/communit ... 27&t=78246" onclick="window.open(this.href);return false;

Personally, although the closure of the RMPP will mean less NRA65 pension for me, I see this new DC pension pot, along with a private pension and my AVC’s as a way of funding early retirement without having to needlessly take my existing RM pensions before their NRA’s. So I intend to take any money that’s on offer to help me do that.

Some people like to ‘live for today and worry about tomorrow when it comes’.
Personally I like to ‘save today so I don’t have to worry about tomorrow’.

Ultimately it’s a personal choice.

[Rommagic]

Robert if you was going to start a private pension today who would you go with? And why?.

[RobertT]

Robert if you was going to start a private pension today who would you go with? And why?.

If you went to 10 different financial advisors they would probably give you 10 different answers to that question. I’m just a postman.

In practice the provider isn’t necessarily important, although there are good and bad ones, it’s the investments within your pension that matter.
Do your homework, or get someone more qualified to do it for you. But consider:

Charges – the lowest isn’t necessarily the best, but don’t pay too much.
Investment choice – some offer a very small choice(Virgin for example) while other offer thousands of different investments(SIPP’s).
Flexibility – try and make sure they offer services under the pension flexibility rules introduced in 2015, such as drawdown and transfers in, etc.

[Rommagic]

Thanks Robert.

[mr hil.]

Will we be able to choose where our own personal "investment pot/fund" is invested? Will we be able to instruct whoever is managing it which funds to invest in, e.g higher risk funds with increased potential for greater returns or safer funds when you get nearer to your retirement age. I do this with an old pension I have and have made up most of the losses it received in previous stock market crashes.

[rambo1]

Will we be able to choose where our own personal "investment pot/fund" is invested? Will we be able to instruct whoever is managing it which funds to invest in, e.g higher risk funds with increased potential for greater returns or safer funds when you get nearer to your retirement age. I do this with an old pension I have and have made up most of the losses it received in previous stock market crashes.

This would be fantastic for savy experienced investors however the not so savy or experienced could effectively gamble away their pension pot.

[rambo1]

Do you think the £750 is really a good idea on managements side as I suppose it would only be worth about 50p a week in your pension but if your young or not thinking of being with Royal Mail for a long time I suppose you could have £500 in your wage packet. I think I would pick the money in my pocket rather than waiting years for a few pence. Maybe my calculations are a little out but maybe someone might know better?

£750 is a pittance in pension terms and only relates to about 4 months’ worth of RM contributions at 10% of basic pay. It will go only a very small way to making up for what we’ll lose by the closure to future accruals of the current DB pension.

You are correct that if you were to buy an annuity with your £750, it wouldn’t get you very much – possibly even less than your 50p per week guess! But you don’t have to buy an annuity! As I suggested here: http://www.royalmailchat.co.uk/communit ... 27&t=78246" onclick="window.open(this.href);return false;

Personally, although the closure of the RMPP will mean less NRA65 pension for me, I see this new DC pension pot, along with a private pension and my AVC’s as a way of funding early retirement without having to needlessly take my existing RM pensions before their NRA’s. So I intend to take any money that’s on offer to help me do that.

Some people like to ‘live for today and worry about tomorrow when it comes’.
Personally I like to ‘save today so I don’t have to worry about tomorrow’.

Ultimately it’s a personal choice.

If I am able to retire at 55 but don't draw my pension till, 60 and 65 for the respective sections so far, do I still take a massive % cut in pension (50 odd %) I think.

[RobertT]

Will we be able to choose where our own personal "investment pot/fund" is invested? Will we be able to instruct whoever is managing it which funds to invest in, e.g higher risk funds with increased potential for greater returns or safer funds when you get nearer to your retirement age. I do this with an old pension I have and have made up most of the losses it received in previous stock market crashes.

We don’t yet know the exact arrangements for the ‘new’ DC pension. It said in the review booklet(page 8), that it could be a new section of the RMPP whatever that means, or the existing DC scheme(RMDCP).

The RMDCP is currently administered by Zurich and offers 11 funds to choose from, plus two ‘lifecycle’ options. Details here: https://www.zurich.co.uk/internet/works ... 128011.pdf" onclick="window.open(this.href);return false;

For the complete guide to the current RMDCP, see here: https://www.zurich.co.uk/internet/works ... 716529.pdf" onclick="window.open(this.href);return false;

[RobertT]

If I am able to retire at 55 but don't draw my pension till, 60 and 65 for the respective sections so far, do I still take a massive % cut in pension (50 odd %) I think.

If you take any of your RMPP early it would be reduced by 5% per year. If you take it at the Normal Retirement Ages of 60 & 65, it won’t be reduced.

You will be able to take your new DC pot anytime after 55. There will be no reductions as such but the less time you pay into it, the less it's likely to be worth.

[nataddick]

This is the response I got when I raised the issue of why there appears to be some 'doubt' over whether there could be a new RMPP section or the existing RMDCP !

'This is a 60 day consultation during which we will be receiving feedback from members to the Company’s proposal and holding further meetings with the Unions, we do not yet know the final outcome and Company decision. As the proposal is simply that, a proposal, the language will not be specific about what the decision will eventually be. For that reason further detail on the proposed DC section is not yet available as it is too early in the consultation process.'