Pension Illustration Today

[RobertT]

So if my wages were broadly the same or slightly more this year than last my Final Salary pension at march 2016 (far left top purple box) should be higher this year than last year.
Is that correct

Yes.
Has your pensionable pay changed from last year? If so, that will be mirrored in the amount of pension you’re entitled to.

[RobertT]

I've received my pension illustration today.
Am I right in thinking if you add total pension earned to 21.3.17 (£5106)
to total pension supplement earned to 31.3.17 (£991) then divide by 52
which gives me my pension built up so far as £117.25 per week with no lump sum taken?
Hopefully one of the clever people on here can point me where i'm going wrong?!

Yes. That figure equates to the total pension you've accrued up to 31st March 2017 and assumes you don't take any of it before the normal retirement ages of 60 and 65.

[Alexei]

I always have great difficulty reading these illustrations. I don't understand why there is never sections that say "What you have paid in this year / all in," "What we have paid in this year / all in," "How much it has grown this year / all in," and "Total amount this year / all in." And THEN give the usual information. All I really want to know, is how much is in my pot? Because in my ten years service, I have paid a hell of a lot more than '£2,372.'

Using the formula above, I get [ (2372 + 487) / 52 = 54.98 ] ... which to me doesn't seem right. Granted, I am 30 years old and been made FT fairly recent. How do they make these calculations, do they base it on expecting you to live another 20 years, and divide it accordingly? So £54.98 p/w for 20 years? It never actually tells you how they work it out.

Surely I can't be the only one who thinks these are illustrated incredibly stupid? What is so hard about providing information such as "You have X amount, to split over Y years, by doing option A, B, or C etc"

[RobertT]

I always have great difficulty reading these illustrations. I don't understand why there is never sections that say "What you have paid in this year / all in," "What we have paid in this year / all in," "How much it has grown this year / all in," and "Total amount this year / all in." And THEN give the usual information. All I really want to know, is how much is in my pot? Because in my ten years service, I have paid a hell of a lot more than '£2,372.'

Using the formula above, I get [ (2372 + 487) / 52 = 54.98 ] ... which to me doesn't seem right. Granted, I am 30 years old and been made FT fairly recent. How do they make these calculations, do they base it on expecting you to live another 20 years, and divide it accordingly? So £54.98 p/w for 20 years? It never actually tells you how they work it out.

Surely I can't be the only one who thinks these are illustrated incredibly stupid? What is so hard about providing information such as "You have X amount, to split over Y years, by doing option A, B, or C etc"

It sounds as if you’re in Section C of the RM Pension Plan. If that is the case you’ve been building up your benefits on a Defined Benefit basis. So the pension you accrued up to March 2008 is based on final salary, and from April 2008 onwards to closure in 2018, it’s on an average salary basis.

They don’t provide a figure of how much your pot is worth, because with a DB pension you’re not building up a pot of money with your name on it! It’s based on your pensionable pay and your length of service. Full details can be found in the plan guide: https://www.royalmailpensionplan.co.uk/ ... an/library" onclick="window.open(this.href);return false;

But I do agree the annual statements could be much clearer.

[cloherty1976]

Robert T could you answer me this question please and I know it's not exact but would just like to find out.
Section C pension and paid all my contributions for 40 years and my final salary is £30000 what would I get as pension and lump sum?

[RobertT]

Robert T could you answer me this question please and I know it's not exact but would just like to find out.
Section C pension and paid all my contributions for 40 years and my final salary is £30000 what would I get as pension and lump sum?

I’m not even going to attempt to put a figure to that question, but you should be able to work out roughly what your NRA60 and NRA65 pension might be worth in the future by using the figures on your annual statement. I would suggest using the 2016 version as that has more detail.

Also, Section C was introduced in 1987, so the maximum pension it is possible to have when the current scheme closes to future accrual in 2018 is 21 years of final salary pension and 10 years of CARE/CSDB pension. But as NRA60 relates to service up to 2010, the maximum possible would then be 23 years of NRA60 and 8 years of NRA65. Under RM’s latest proposals you will just be building up a pot of money to fund the lump sum from April 2018 onwards!

As far as I’m aware and under RM’s original proposals, from April 2018 Section C members existing benefits will increase with RPI inflation until you take them, which is an amount nobody can easily predict too far into the future. But I would suggest using different amounts to give you varying ideas of how much your pension will increase. So from your 2016 statement:

1. Take your estimated pension at 60 figure on page 2 and work out what an x% increase would add to your pension each year until you reach 60. For example, if your NRA60 is £10,000 per year and you use 2% as a base inflation figure that would increase your pension to £10,200 after year one, £10,404 after year two and £10,612 after year three, etc.

2. Work out what your NRA65 amount is by subtracting the NRA60 figure from ‘total pension’. Work out roughly what another two years of NRA65 pension would be worth taking you up to 2018, by dividing by 6 and then multiplying by 8.

3. Use the same method as above to increase the pension by inflation until you want to take it.

4. Make allowances for any intention to take your pension/s before normal retirement age, i.e make 5% per year reductions.

5. Section C members don’t get a lump sum as standard, but from April will be building up a pot of money to provide one, should they want to do that(under the latest proposals). So it’s fairly easy to work out what yours and RM’s annual contributions will be based on the proposed 19.6% of pensionable pay total, and multiply by however many years you intend on staying with RM after April 2018. You may or may not get any investment growth on top!

The above is only going to be a rough guide and will probably be more accurate the older you are, so don’t make any major decisions based on the answers.

[cloherty1976]

Robert T could you answer me this question please and I know it's not exact but would just like to find out.
Section C pension and paid all my contributions for 40 years and my final salary is £30000 what would I get as pension and lump sum?

I’m not even going to attempt to put a figure to that question, but you should be able to work out roughly what your NRA60 and NRA65 pension might be worth in the future by using the figures on your annual statement. I would suggest using the 2016 version as that has more detail.

Also, Section C was introduced in 1987, so the maximum pension it is possible to have when the current scheme closes to future accrual in 2018 is 31 years of final salary pension and 10 years of CARE/CSDB pension. But as NRA60 relates to service up to 2010, the maximum possible would then be 33 years of NRA60 and 8 years of NRA65. Under RM’s latest proposals you will just be building up a pot of money to fund the lump sum from April 2018 onwards!

As far as I’m aware and under RM’s original proposals, from April 2018 Section C members existing benefits will increase with RPI inflation until you take them, which is an amount nobody can easily predict too far into the future. But I would suggest using different amounts to give you varying ideas of how much your pension will increase. So from your 2016 statement:

1. Take your estimated pension at 60 figure on page 2 and work out what an x% increase would add to your pension each year until you reach 60. For example, if your NRA60 is £10,000 per year and you use 2% as a base inflation figure that would increase your pension to £10,200 after year one, £10,404 after year two and £10,612 after year three, etc.

2. Work out what your NRA65 amount is by subtracting the NRA60 figure from ‘total pension’. Work out roughly what another two years of NRA65 pension would be worth taking you up to 2018, by dividing by 6 and then multiplying by 8.

3. Use the same method as above to increase the pension by inflation until you want to take it.

4. Make allowances for any intention to take your pension/s before normal retirement age, i.e make 5% per year reductions.

5. Section C members don’t get a lump sum as standard, but from April will be building up a pot of money to provide one, should they want to do that(under the latest proposals). So it’s fairly easy to work out what yours and RM’s annual contributions will be based on the proposed 19.6% of pensionable pay total, and multiply by however many years you intend on staying with RM after April 2018. You may or may not get any investment growth on top!

The above is only going to be a rough guide and will probably be more accurate the older you are, so don’t make any major decisions based on the answers.

Thanks for the answer,so at least I now know that I don't know what I would have got if it would have stayed the same.
So I don't think I will worry about what it's going to be anymore not that I was worried in the first place

[FAB]

Robert T could you answer me this question please and I know it's not exact but would just like to find out.
Section C pension and paid all my contributions for 40 years and my final salary is £30000 what would I get as pension and lump sum?

I’m not even going to attempt to put a figure to that question, but you should be able to work out roughly what your NRA60 and NRA65 pension might be worth in the future by using the figures on your annual statement. I would suggest using the 2016 version as that has more detail.

Also, Section C was introduced in 1987, so the maximum pension it is possible to have when the current scheme closes to future accrual in 2018 is 31 years of final salary pension and 10 years of CARE/CSDB pension. But as NRA60 relates to service up to 2010, the maximum possible would then be 33 years of NRA60 and 8 years of NRA65. Under RM’s latest proposals you will just be building up a pot of money to fund the lump sum from April 2018 onwards!

As far as I’m aware and under RM’s original proposals, from April 2018 Section C members existing benefits will increase with RPI inflation until you take them, which is an amount nobody can easily predict too far into the future. But I would suggest using different amounts to give you varying ideas of how much your pension will increase. So from your 2016 statement:

1. Take your estimated pension at 60 figure on page 2 and work out what an x% increase would add to your pension each year until you reach 60. For example, if your NRA60 is £10,000 per year and you use 2% as a base inflation figure that would increase your pension to £10,200 after year one, £10,404 after year two and £10,612 after year three, etc.

2. Work out what your NRA65 amount is by subtracting the NRA60 figure from ‘total pension’. Work out roughly what another two years of NRA65 pension would be worth taking you up to 2018, by dividing by 6 and then multiplying by 8.

3. Use the same method as above to increase the pension by inflation until you want to take it.

4. Make allowances for any intention to take your pension/s before normal retirement age, i.e make 5% per year reductions.

5. Section C members don’t get a lump sum as standard, but from April will be building up a pot of money to provide one, should they want to do that(under the latest proposals). So it’s fairly easy to work out what yours and RM’s annual contributions will be based on the proposed 19.6% of pensionable pay total, and multiply by however many years you intend on staying with RM after April 2018. You may or may not get any investment growth on top!

The above is only going to be a rough guide and will probably be more accurate the older you are, so don’t make any major decisions based on the answers.

Thanks for the answer,so at least I now know that I don't know what I would have got if it would have stayed the same.
So I don't think I will worry about what it's going to be anymore not that I was worried in the first place

If you want to depress yourself about how much your pension would have been worth without any changes. Just take your £30000 final salary reduce it by £3328 which is the lower earnings deduction. Times the remaining figure by 1.67% giving you about £445. This is the amount you would get for each year of service. So for the 23 years at NRA60 given the fact the 2 years of career average pension is worth less than £445 you might get about £10200. And another 8 years of career average pension at 65. Plus whatever pension scheme replaces it after March next year. If none of these changes had happened you would have got about £17800 after 40 years at your current wages!

[cloherty1976]

Robert T could you answer me this question please and I know it's not exact but would just like to find out.
Section C pension and paid all my contributions for 40 years and my final salary is £30000 what would I get as pension and lump sum?

I’m not even going to attempt to put a figure to that question, but you should be able to work out roughly what your NRA60 and NRA65 pension might be worth in the future by using the figures on your annual statement. I would suggest using the 2016 version as that has more detail.

Also, Section C was introduced in 1987, so the maximum pension it is possible to have when the current scheme closes to future accrual in 2018 is 31 years of final salary pension and 10 years of CARE/CSDB pension. But as NRA60 relates to service up to 2010, the maximum possible would then be 33 years of NRA60 and 8 years of NRA65. Under RM’s latest proposals you will just be building up a pot of money to fund the lump sum from April 2018 onwards!

As far as I’m aware and under RM’s original proposals, from April 2018 Section C members existing benefits will increase with RPI inflation until you take them, which is an amount nobody can easily predict too far into the future. But I would suggest using different amounts to give you varying ideas of how much your pension will increase. So from your 2016 statement:

1. Take your estimated pension at 60 figure on page 2 and work out what an x% increase would add to your pension each year until you reach 60. For example, if your NRA60 is £10,000 per year and you use 2% as a base inflation figure that would increase your pension to £10,200 after year one, £10,404 after year two and £10,612 after year three, etc.

2. Work out what your NRA65 amount is by subtracting the NRA60 figure from ‘total pension’. Work out roughly what another two years of NRA65 pension would be worth taking you up to 2018, by dividing by 6 and then multiplying by 8.

3. Use the same method as above to increase the pension by inflation until you want to take it.

4. Make allowances for any intention to take your pension/s before normal retirement age, i.e make 5% per year reductions.

5. Section C members don’t get a lump sum as standard, but from April will be building up a pot of money to provide one, should they want to do that(under the latest proposals). So it’s fairly easy to work out what yours and RM’s annual contributions will be based on the proposed 19.6% of pensionable pay total, and multiply by however many years you intend on staying with RM after April 2018. You may or may not get any investment growth on top!

The above is only going to be a rough guide and will probably be more accurate the older you are, so don’t make any major decisions based on the answers.

Thanks for the answer,so at least I now know that I don't know what I would have got if it would have stayed the same.
So I don't think I will worry about what it's going to be anymore not that I was worried in the first place

If you want to depress yourself about how much your pension would have been worth without any changes. Just take your £30000 final salary reduce it by £3328 which is the lower earnings deduction. Times the remaining figure by 1.67% giving you about £445. This is the amount you would get for each year of service. So for the 23 years at NRA60 given the fact the 2 years of career average pension is worth less than £445 you might get about £10200. And another 8 years of career average pension at 65. Plus whatever pension scheme replaces it after March next year. If none of these changes had happened you would have got about £17800 after 40 years at your current wages!

Brilliant so with that figure there is very little difference so I shall wait for the day and see what I get.

[BeamishStout]

Got mine a few days ago.

Trouble is they give less information than the 2016 statement. For example the 2017 statement does not give the section 'Your benefits at key life stages' for very obvious reasons.

In my particular case I am 60 in early April 2018 and intend taking all my benefits at 60 and getting out whilst I am still kicking and breathing. ( I am extremely fortunate that the forthcoming pensions situation from April 2018 will not affect me). Having those sections for me personally would have been extremely useful.

In the first '2018 Pension Review : our proposal document' from RM issued some time ago it gave me total illustrative pensions "before" and "after" if you stay in service until age 60 and then take all your benefits in full (with early retirement reductions) and both of RM's figures were within a £ (no surprise). These were very useful for my particular circumstances.

So my Q, @ Robert. If I follow your post at 1240 today, I get a pension figure about £50 higher pa than RM's illustration presumably because of higher inflation since the RM proposal was published but this was using the 2016 numbers. So how the heck can I use the very latest figures (now within 6 months of retirement) to get a more accurate figure? When I followed your post earlier in this thread from 3rd October 4.54pm (using the latest2017 nutshell) I got a figure £125 lower! Still in the right ball park I grant you. Any thoughts? What might I be doing wrong?

BTW I have emailed Chesterfield for a personalised quote for taking everything when I hit 60. Just don't want any nasty surprises when I get it.

[vmaxv4]

Spoke to pensions today and was assured that our NRA60 & 65 would be produced in another illustration hopefully before the new Scheme starts in April 2018

[RobertT]

So my Q, @ Robert. If I follow your post at 1240 today, I get a pension figure about £50 higher pa than RM's illustration presumably because of higher inflation since the RM proposal was published but this was using the 2016 numbers. So how the heck can I use the very latest figures (now within 6 months of retirement) to get a more accurate figure? When I followed your post earlier in this thread from 3rd October 4.54pm (using the latest2017 nutshell) I got a figure £125 lower! Still in the right ball park I grant you. Any thoughts? What might I be doing wrong?

All I really try and do is enable people to make a bit more sense of their statements and give them a rough idea of what pension they can expect. So just take it for what it is - a rough estimate.

[RobertT]

Spoke to pensions today and was assured that our NRA60 & 65 would be produced in another illustration hopefully before the new Scheme starts in April 2018

Hopefully they’ll be a bit easier to understand!

[BeamishStout]

Spoke to pensions today and was assured that our NRA60 & 65 would be produced in another illustration hopefully before the new Scheme starts in April 2018

Hopefully they’ll be a bit easier to understand!

Definitely for me as well