Not taking your Pension at 55

linntroika · Post by **linntroika** » 21 Jan 2018, 11:45

Hello
I would just like clarification on a few points

I dont expect to be working for RM after the age of 55, but intend to take my NRA 60 & NRA 65 when i have reached the appropriate ages . ( I understand that i will not penalised by the 25% & 50% reductions if i were to take it early.)

Q1. Do both NRA grow in interest per year until they have matured and if so what would be the percentage rate approx ( am i right in thinking it would be around 2% per year compounded)
Q2.Does the same apply to AVCs and can i still pay into Zurich avc if i am not working for RM
Q3.Am i right in thinking that to get the very MAX out of your pension , to take your NRA totally as pension ( no lump sum ) and only use your AVC + new pension scheme 2018 onwards as a lump sum
Q4. Is there any point in seeking independent advice if i perceive what i have said to be correct in attaining the maximum out of my pension
Many Thanks in advance

Post by **RobertT** » 21 Jan 2018, 12:51

linntroika wrote:Hello
I would just like clarification on a few points

I dont expect to be working for RM after the age of 55, but intend to take my NRA 60 & NRA 65 when i have reached the appropriate ages . ( I understand that i will not penalised by the 25% & 50% reductions if i were to take it early.)

Q1. Do both NRA grow in interest per year until they have matured and if so what would be the percentage rate approx ( am i right in thinking it would be around 2% per year compounded)

It goes up with the rate of RPI inflation, which can vary quite a lot. And yes it would be compounded year on year!

Q2.Does the same apply to AVCs and can i still pay into Zurich avc if i am not working for RM

Whether the value of your AVC’s increases or decreases will depend on where they’re invested. The growth fund is going to be at the whims of the stock market to a large degree, for example.
You can’t pay into RM AVC’s if you leave the business.

Q3.Am i right in thinking that to get the very MAX out of your pension , to take your NRA totally as pension ( no lump sum ) and only use your AVC + new pension scheme 2018 onwards as a lump sum

The aim of AVC’s is to fund the tax free lump sum when you take your main scheme benefits. That is so you don’t have to commute some pension to provide the lump sum. Which is particularly useful for section C members who don’t get a lump sum as standard but section B members do.

Personally I see my NRA60 + AVC’s as one ‘pot’ to be taken at 60 and my NRA65 as another to be taken at 65. But what happens with the new pension after 1st April is unclear because there will probably be a transitional Cash Balance pension initially, followed by a Collective Defined Contribution pension afterwards.

But as there are no CDC pension schemes currently in operation in the UK, nobody really knows how they will work in combination with RM’s existing pension scheme, and because legislation needs to be passed to allow the CDC scheme to operate, there's always the possibility it may not be introduced at all!
So in practice what happens after 1st April and going forward is very much in the air at the moment.

* The Cash Balance pension just provides a pot of money similar to Bonusplan & Flexiplan, while the CDC would provide both a lump sum and a variable income.

Q4. Is there any point in seeking independent advice if i perceive what i have said to be correct in attaining the maximum out of my pension
Many Thanks in advance

That’s a choice only you can make.

BeamishStout · Post by **BeamishStout** » 21 Jan 2018, 17:43

linntroika wrote: I dont expect to be working for RM after the age of 55

You also might need to factor in the free share issue and what happens when you retire before 60

This is something I am all too acutely aware of approaching 60 and impending retirement.

linntroika · Post by **linntroika** » 21 Jan 2018, 18:49

Many Thanks for the clarification , ive learnt so much on this site in the past year , very helpful info and posts

Cheers

TheTrolleyMan · Post by **TheTrolleyMan** » 21 Jan 2018, 19:06

Be aware that if the CWU proposed pension scheme comes in that it'll be a NRA 67

Post by **RobertT** » 21 Jan 2018, 19:19

TheTrolleyMan wrote:Be aware that if the CWU proposed pension scheme comes in that it'll be a NRA 67

The CWU'S WinRS proposal was thrown out months ago.

We don't yet know any exact details about the new scheme/s, but RMs original Cash Balance plans had an NRA of 65.

TheStrangler · Post by **TheStrangler** » 29 Jan 2018, 20:17

So if the new scheme means nra65 becomes Nra67 does that mean you lose even more if you retire now at 55?
What happens with the free shares if you retire at 55?

Post by **RobertT** » 30 Jan 2018, 04:41

TheStrangler wrote:So if the new scheme means nra65 becomes Nra67 does that mean you lose even more if you retire now at 55?

Your NRA60 and NRA65 pensions will continue to be treated exactly as they are now. Any change in the NRA for the new scheme will only apply to that and from its implementation date.

What happens with the free shares if you retire at 55?

Leaving at 60 is regarded as retiring as far as the free shares are concerned and you get to either keep or sell them free of tax and NI, but if you leave earlier normal rules will apply.

So any shares that have already reached their 5 year anniversary you can keep/sell tax free. Any between 3-5 years will be taxable. Any before 3 years you will lose.

TheStrangler · Post by **TheStrangler** » 30 Jan 2018, 11:05

Thanks Robert , I can't remember when the last batch of shares was issued , I'm guessing it would have been.more than 3 years ago? In which case at least I wouldn't lose any.

Post by **RobertT** » 30 Jan 2018, 13:41

TheStrangler wrote:Thanks Robert , I can't remember when the last batch of shares was issued , I'm guessing it would have been.more than 3 years ago? In which case at least I wouldn't lose any.

Have a look here for the allocation dates.

TheTrolleyMan · Post by **TheTrolleyMan** » 01 Feb 2018, 20:45

RobertT wrote:
TheTrolleyMan wrote:Be aware that if the CWU proposed pension scheme comes in that it'll be a NRA 67
The CWU'S WinRS proposal was thrown out months ago.

We don't yet know any exact details about the new scheme/s, but RMs original Cash Balance plans had an NRA of 65.

NRA 67 Robert

Post by **RobertT** » 02 Feb 2018, 04:25

TheTrolleyMan wrote:NRA 67 Robert

It was always going to be a possibility!
But it will only apply to the CDC scheme from when that is introduced. The existing NRA60 will still be 60, and the NRA65 and the transitional DBCB scheme will be 65.