PENSION, AVC & SIPP

[milly]

https://www.finalsalarytransfer.com/p/7 ... on-schemes" onclick="window.open(this.href);return false;

Royal Mail is mentioned on a list of schemes that Final Salary Transfer Specialist Tideway Asset Management have dealt with.
I know that companies like Hargreaves Lansdown won't touch Final Salary schemes so you would have to use a company like Tideway first and then transfer to another provider such as Hargreaves Lansdown etc.
With interest rates being so low CETV's are probably the highest they have ever been.

[nataddick]

I have a HL SIPP amongst my investments. I have also read all the brochures that you can download from the Tideway website on this topic as well as many more 'neutral articles' including those from Ros Altmann who I greatly respect.

I have just been doing some research online and came across the following determination from the Pensions Ombudsman.

https://www.pensions-ombudsman.org.uk/w ... 1197-1.pdf" onclick="window.open(this.href);return false;

The key point here is under the Complaint Summary No.3

'Mr S has deferred benefits under the Scheme, which is an unfunded public sector scheme. In 2015, new legislation (Appendix 1) came into effect which meant benefits from unfunded public sector schemes could not be transferred to defined contribution schemes after 5 April 2015'

So now I think I understand the comments on the RMPP website, as posted by Robert. I also need to consider the implications of this legislation that until now, appears to have gone unnoticed !!!

[RobertT]

There’s a few points I’d like to make following the last few posts:

1. Everyone in a funded DB pension scheme has the right to request a CETV each year if they choose. As the RMSPS is now an unfunded government scheme, I would assume any CETV from RM would relate to just the RMPP(post 2012), which can be transferred. Perhaps someone who's had a CETV from RM could confirm?

2. There is a legal obligation to provide the CETV with 3 months, how long it actually takes within that limit may well depend on staff workload, etc.

3. One of the reasons that the government doesn’t offer the ability to transfer our pre 2012 pensions would be the cost. There are many workers from the NHS, armed services, police, teachers and the civil service who have unfunded government backed pensions. It would cost the government and so the UK taxpayer £Billions to pay off even a small proportion of those pensions. Although I take the point that in the long run it’s probably cheaper for them to do so, but being cheaper for them may also means a worse deal for us!

4. If the ability to transfer does exist with any DB scheme, I agree with nataddick that the 20x normal is just not worth it, but many companies offer more due to where the assets are invested, just as much as wanting to get people off their books. You might find this an interesting read: https://henrytapper.com/2016/12/04/why- ... usly-high/" onclick="window.open(this.href);return false;


5. The inability to transfer our RMSPS benefits was first mentioned by RM following the introduction of the ‘pension freedoms’ in 2015. An article was posted on the old RM pensions website and subsequently copied & pasted by me onto these forums in April 2015, and can be found here: http://www.royalmailchat.co.uk/communit ... 27&t=69013" onclick="window.open(this.href);return false;

The following text is included:

The Government intends to ban most transfers from ‘unfunded’ public sector schemes. This includes the Royal Mail Statutory Pension Schemes, so you cannot
transfer benefits from this scheme to a money purchase scheme, such as a personal pension, if it offers the new flexibilities introduced from April 2015.

Am I affected?
The benefits you built up before 1 April 2012 are in the Royal Mail Statutory Pension Scheme. If you leave employment (or decide to stop contributing to the Plan) you won’t be able to transfer this part of your benefits to a money purchase scheme if it offers the new pension flexibilities available from April 2015. Most personal pensions are money purchase schemes.

*They have since updated the website and the article is no longer available on the new look ‘squirrel’ site.

[nataddick]

Just been doing some background reading myself and came across the following policy point taken from page 15 RMSPS Annual Report 2014/5.

'Advice was sought from HMT and TSol relating to the new pension flexibility arrangements effective from April 2015 and what the implications were for RMSPS members. A letter was sent to members in January advising them that RMSPS is an unfunded public sector defined benefits scheme and therefore benefits cannot be transferred out to schemes that provide flexible benefits on transfer.'

http://www.royalmailpensionplan.co.uk/s ... 201415.pdf" onclick="window.open(this.href);return false;

I have waded through my pension files and cannot find the letter referred to issued in January 2015 but I do have a letter dated May 2014 headed 'An update on recent benefit changes' and on page 3 it refers to the fact that 'The Government intends to prevent transfers from public sector schemes into 'defined contribution' such as personal pensions etc, etc.

I am already in receipt of my NRA 60 and as Robert mentions, I also assume that any CETV would apply to the RMPP post 2012. For me, getting a CETV is option to explore but until a value is known, it is impossible to know whether it is the preferred option.

[hermon]

Here's a bit of info which may be useful to those looking at Transfer Values :
I am section B with 30 yrs service and on a basic of £26000 ( so just under £23000 pensionable pay).
Transfer value of pension up to 2012 = £184000
Transfer value 2012-2017 = £51000

[hermon]

Edit to above - should say section C not B

[RobertT]

I assume you’ve got that from the Pensions Service Centre? If so and with regard to the pension up to 2012: Is the transfer value just for information purposes, or are they suggesting it’s actually possible to transfer it, despite various documentation suggesting it’s not possible?

[hermon]

Yes, I requested a value from them after my wife did from her pension scheme and found that her calculation was based on a multiple of x32. My section B calculation is roughly x20. Haven't got my statement in front of me, but it basically stated that the pre 2012 could not be transferred to a product offering flexible options (drawdown etc). Presumably this means I could only transfer it out and use it to buy an annuity in the future.
The £51000 can be transferred subject to obtaining financial advice ( no advice required if under £30k).

[hermon]

Should say C not B again !!

[RobertT]

Yes, I requested a value from them after my wife did from her pension scheme and found that her calculation was based on a multiple of x32. My section B calculation is roughly x20. Haven't got my statement in front of me, but it basically stated that the pre 2012 could not be transferred to a product offering flexible options (drawdown etc). Presumably this means I could only transfer it out and use it to buy an annuity in the future.
The £51000 can be transferred subject to obtaining financial advice ( no advice required if under £30k).

Buying an annuity is one of the flexible options you get with a DC pension scheme.

Therefore there is no way to transfer the pre 2012 part of the RM pension directly to a DC scheme, and considering they’re only offering a multiple of x20, it probably isn’t a sensible thing for most people to do anyway.

[hermon]

Hi Robert - here is the exact wording in my valuation :
"It will be possible to transfer your RMSPS benefits to an occupational or personal pension scheme provided the transfer value is not used to provide Flexible Benefits. Flexible Benefits are Money Purchase or Cash Balance benefits, or any benefits not classed as Safeguarded benefits."
So, what type of personal pension could it be transferred to ?
Bit confusing to me as a layman but I'm reading 'safeguarded' as guaranteed annuity ?
What do you think ?

[RobertT]

Safeguarded Benefits are Defined Benefit pensions, Guaranteed Minimum Pensions(GMP’s) and Guaranteed Annuity Rates(GAR’s). This gives more info: http://grovetransfers.co.uk/wp-content/ ... n-2016.pdf" onclick="window.open(this.href);return false;

I read that as any transfer of safeguarded benefits must be to somewhere that provides at least the same level of benefits that you’re giving up. That is unlikely to be the case if buying an annuity on the open market!

For example:

If theoretically you did transfer your £184,000 into a personal pension and then purchased an annuity with it, which provided similar benefits to your RM pension(inflation proofed income and a spouses pension on your death).
That annuity would only give you a starting income of around £4.5k at age 60 or around £5.5k at 65. Based on a value of £184k and the x20 multiple, I would expect your RM pension to be significantly higher.

So I think in practice, any transfer of the RMSPS could only be into another DB pension scheme. Therefore you will have left RM employment and now work for another company which offers such a scheme and accepts transfers in.

[hermon]

Thanks for the info