Pension/AVC help

Kevster77 · Post by **Kevster77** » 18 Mar 2019, 22:40

Hi. I joined RM as a postman in late 2010. I was entered into the rmdcp pension scheme. That pension scheme was frozen at end of March 2018 (pot value £15k) when I transferred over to the new rmpp dbcbs scheme. Does this make me a section C member??
I’m turning 42 this year and I’m looking at my pension options very seriously. I want to pay more than the 6% contribution and have read about avc’s. One of my colleagues told me that rm are no longer offering an avc. Is this correct? I would look to do the bonus plan (no brainer) and also start off a flexiplan with about £20 per week (so £13.60 of my pay?!)...
So from what I gather if this cdc scheme is introduced soon I will have 3 different pots. My rmdcp pot, my dbcbs pot and then my contributions to the new cdc scheme. Does this have any bearing on an avc? Do my avc contributions sit in a different pool to the main scheme or is it all in the same pot? If I start an avc now whilst in the dbcbs scheme do things change when the cdc starts? (In that should I wait until the cdc starts?)
If I am eligible for an rm avc would that in general be a better option than opening up a private pension plan elsewhere?
Sorry if I’ve asked obvious questions or if it’s all covered clearly in a separate section but any advice would be truly appreciated

Post by **RobertT** » 19 Mar 2019, 06:14

Kevster77 wrote:Hi. I joined RM as a postman in late 2010. I was entered into the rmdcp pension scheme. That pension scheme was frozen at end of March 2018 (pot value £15k) when I transferred over to the new rmpp dbcbs scheme. Does this make me a section C member??

No, you're a section F member of the RMPP.

I’m turning 42 this year and I’m looking at my pension options very seriously. I want to pay more than the 6% contribution and have read about avc’s. One of my colleagues told me that rm are no longer offering an avc. Is this correct? I would look to do the bonus plan (no brainer) and also start off a flexiplan with about £20 per week (so £13.60 of my pay?!)...

RM still offer AVC's and as a member of the RMPP you have the option of paying into Bonusplan and Flexiplan.
Bonusplan benefits from some extra contribution from RM, and they both benefit from tax relief and PSE in the same way standard pension payments do. So each £1 gross contribution only actually costs you £0.68, with the tax man paying the rest.

So from what I gather if this cdc scheme is introduced soon I will have 3 different pots. My rmdcp pot, my dbcbs pot and then my contributions to the new cdc scheme. Does this have any bearing on an avc? Do my avc contributions sit in a different pool to the main scheme or is it all in the same pot?

AVC's are DC pension pots similar to the RMDCP and are separate entities. So if you pay into both Bonusplan & Flexiplan, you would have have 5 different RM pensions.
There is also the Defined Benefit Lump Sum Scheme(DBLSS) which will 'sit alongside' the CDC scheme to provide a tax free lump sum when taking your CDC pension benefits.

If I start an avc now whilst in the dbcbs scheme do things change when the cdc starts? (In that should I wait until the cdc starts?)

We don't yet know what will happen to the current AVC's when CDC starts. We might be able to carry on paying into them, or we might not. In my opinion, as they are 'attached' to the RMPP and because CDC will be a new and separate scheme, I don't think we will be able to carry on paying into them. Or if we are, they won't be linked to the CDC benefits in any way. I assume we'll be told in due course.

There will also be the opportunity to pay in another 1% of pay into the DBLSS(matched by RM), when the CDC scheme is in operation.

If I am eligible for an rm avc would that in general be a better option than opening up a private pension plan elsewhere?

The tax benefits are better if you pay in via RM because of PSE, which you don't get with a personal pension – each £1 gross will cost you £0.80 instead with a PP. But you could argue that a PP is more flexible and will have a bigger choice of investments to choose from.

Sorry if I’ve asked obvious questions or if it’s all covered clearly in a separate section but any advice would be truly appreciated

Take a look at the RMPP website. It'll give you lots more info, particularly the library section as that contains the plan guide and a good guide on AVC's.

Kevster77 · Post by **Kevster77** » 19 Mar 2019, 06:53

Thank you very much Robert T, very helpful responses.
Can I just clarify 1 thing please, You believe more than likely the avc won’t run along aside the new cdc scheme. IF that ends up being the case, in your opinion is it worth me starting a flexiplan for what might be a very short period of time or would you suggest just starting an external/private plan straight away?

Post by **RobertT** » 19 Mar 2019, 08:38

The answer to that is probably quite subjective because there are reasons to do both.

In terms of contributions going in, you're better off with AVC's due to the benefit of PSE and additional money from RM via Bonusplan. But in actual money terms perhaps won't be a huge amount?

In practical terms a PP might be better to keep more of your money in one place going into the future. Although you do have the option of transferring AVC's and your RMDCP pot out into a PP if you want to.

Investment choices are limited with AVC's, but would be bigger with a PP.

Charges are also something to look at. They're quite low with AVC's, but might be higher with a PP.

RM pension changes tend to happen on 1st April in any given year, although I don't think there's anything written in stone to say they have to!
If that's the date CDC is going to start, and if things go as quickly as they can go from now on, then it's not going to start until 1st April 2020 at the earliest. So you've got 12 months to take advantage of AVC's, and maybe more.

Sorry I haven't given you a yes or no answer, but I don't think it's possible to. Ultimately it's a decision for you.

Kevster77 · Post by **Kevster77** » 19 Mar 2019, 13:40

Thanks again RobertT, that’s been really helpful. I think with the option of being able to transfer them out into a pp I will lean towards taking advantage of the avc’s whilst they’re still available.

Post by **RobertT** » 19 Mar 2019, 13:47

Happy to help.

Sputters2017 · Post by **Sputters2017** » 20 Mar 2019, 19:55

Robert .is it possible to pay more money into the bonus growth plan that rm matches

Post by **RobertT** » 20 Mar 2019, 20:07

Sputters2017 wrote:Robert .is it possible to pay more money into the bonus growth plan that rm matches

The simple answer is no, you can't pay in more into Bonusplan. It's limited to 4.5% of the LED, more info here.

But you can pay in more via Flexiplan if you want to.

Kevster77 · Post by **Kevster77** » 20 Mar 2019, 20:31

Hi RobertT. I was looking through the booklet we had last year and all the figures and estimates seem to be calculated for section a/b/c members. You mentioned earlier that I would be a section f member. Are their any significant differences between section f and section c which I assume most employees fall under?!

Sputters2017 · Post by **Sputters2017** » 20 Mar 2019, 20:43

RobertT wrote:
Sputters2017 wrote:Robert .is it possible to pay more money into the bonus growth plan that rm matches
The simple answer is no, you can't pay in more into Bonusplan. It's limited to 4.5% of the LED, more info here.

But you can pay in more via Flexiplan if you want to.

Thanks for the info as I'm not currently paying 4.5% can I top it up to 4.5% the link didn't actually say . Thanks again

Post by **RobertT** » 21 Mar 2019, 06:10

Kevster77 wrote:Hi RobertT. I was looking through the booklet we had last year and all the figures and estimates seem to be calculated for section a/b/c members. You mentioned earlier that I would be a section f member. Are their any significant differences between section f and section c which I assume most employees fall under?!

It sounds like you might have been sent the wrong plan guide?

There are huge differences between section F and A/B/C. The main one being with F you're just building up a pot of money with options similar to the RMDCP, while the others provide an actual pension.

The section F plan guide can be found on the RMPP website, here.

Post by **RobertT** » 21 Mar 2019, 06:13

Sputters2017 wrote:
RobertT wrote:
Sputters2017 wrote:Robert .is it possible to pay more money into the bonus growth plan that rm matches
The simple answer is no, you can't pay in more into Bonusplan. It's limited to 4.5% of the LED, more info here.

But you can pay in more via Flexiplan if you want to.
Thanks for the info as I'm not currently paying 4.5% can I top it up to 4.5% the link didn't actually say . Thanks again

Bonusplan payments are a set 4.5% of the LED, although I think the amounts you pay might be pro-rata if you're part time?
I'm full time, in section C and my payments are £2.88 gross per week and they've been that for about 20 years. The net amount once tax relief & PSE has been factored in, is £1.97.

If you think you're not paying the correct amount, then I suggest contacting the Pension Service Centre in Sheffield for guidance.

Kevster77 · Post by **Kevster77** » 21 Mar 2019, 06:36

Thank you RobertT, I have not seen that plan guide before. I will have a good read.

heapsy · Post by **heapsy** » 26 Mar 2019, 11:54

Sorry if the answer has been posted somewhere else. What is the address if you want to increase your AVC payments? I'm section C and pay into the DBCBS. Cheers in advance.

Post by **RobertT** » 26 Mar 2019, 14:30

heapsy wrote:Sorry if the answer has been posted somewhere else. What is the address if you want to increase your AVC payments? I'm section C and pay into the DBCBS. Cheers in advance.

Just look at the RMPP website: https://www.royalmailpensionplan.co.uk/ ... l-contacts" onclick="window.open(this.href);return false;