Royal Mail pension lump sum

panda64 · Post by **panda64** » 09 Jun 2019, 16:14

This may be a stupid question but hopefully not. I just wondered if anyone could tell me if when you have taken the tax-free lump sum and started receiving the pension is there any option to take any more of your pension as a lump sum, not tax-free? I think I am a C pension, I left in 2002. Any information will be appreciated.

Post by **RobertT** » 09 Jun 2019, 16:24

Once you've started taking your pension, there is no option to cash it in or receive a lump sum instead.
But you will get an index linked income for the rest of your life and a spouses pension on your death(if applicable).

panda64 · Post by **panda64** » 09 Jun 2019, 17:09

Thanks Robert.
Is it not possible to transfer it to another pension scheme and then take some out as a lump sum or is that not possible either?

Post by **RobertT** » 09 Jun 2019, 17:32

I'm afraid not!
Once you've started to take it, you can't change your mind and do something else with it.

panda64 · Post by **panda64** » 10 Jun 2019, 06:01

There was no option for taking it as a whole lump sum on the forms, so if this had been an option why was it not given? I thought you could do it within 6 months of first taking the pension. Sorry for all the questions.

lordthornber · Post by **lordthornber** » 10 Jun 2019, 07:40

I think your confusion is arising from the type of Pension Royal Mail's is. It is a defined benefit scheme, or gold plated if you like.

If it was a defined contribution or private or works pension (call it what you like), then yes you could take the lot as a lump sum. You'd pay tax at your prevailing rate though on everything over 25%.

lordthornber · Post by **lordthornber** » 10 Jun 2019, 07:42

Just to add, there is no option in a gold plated scheme to take the entire pot as a lump sum, so you haven't missed out on anything.

panda64 · Post by **panda64** » 10 Jun 2019, 11:58

Thank you lordthornber.

Post by **RobertT** » 10 Jun 2019, 14:14

There is an option to take a defined benefit pension as a lump sum – you would have to get Cash Equivalent Cash Value(CETV) and then transfer it to a defined contribution scheme.

The RM scheme is split into two parts:

1. The Royal Mail Statutory Pension Scheme(RMSPS) which relates to pensions accrued up to 31st March 2012 and is now paid for the government/tax payer.
2. The Royal Mail Pension Plan(RMPP) which relates from 1st April 2012 to 31st March 2018 and is the responsibility of RM.

In practice if you have benefits in the RMSPS which panda64 does, then a direct transfer to a DC scheme is not allowed. But a transfer to another DB scheme(that she would have to be a current member of at the time of transfer) and then a combined transfer to DC might have been a possibility?

RMPP benefits can be transferred to DC via a CETV.

But in any case, a transfer out of a DB scheme would have to occur before benefits are taken. It can't be done afterwards!

While it is true that you can take the whole of a DC pension pot as one lump sum, Panda64 stated in her original post that she had already taken her benefits. So if she had infact had a DC pension and had already chosen to buy an annuity(income for life), then it would not be possible to reverse that decision.