2019 Benefit illustration = CONFUSED

linntroika · Post by **linntroika** » 18 Oct 2019, 22:21

A friend in my workplace the other day stated to me that his total pension earned to 31st March 2019 and his lump sum was less than last years 2018 illustration ? I informed him i had not received my illustration yet , but would see if i was in the same position . Today i received my 2019 illustration and to my annoyance he was right

I am quite a few K down (total pot worth ) on last years illustration and to rub salt into the wounds in this years illustration it states there was an increase of 3.3% , this is not even taking into consideration the cash balance fund which is separate

Thoughts ???????????????

renrag40 · Post by **renrag40** » 19 Oct 2019, 01:07

Have you changed shifts between the 2 illustrations? From lates to earlies for example. That would change your pensionable pay so would therefore effect your pre 2008 pension estimate.

linntroika · Post by **linntroika** » 19 Oct 2019, 06:54

As far as i am aware the NRA 60 and 65 pensions are now closed and should grow each year by CPI, my benefits illustration for last year 2018 was 6k more than 2019(total pension pot ) , i was expecting to see a 3.3% increase on last years pot + the cash balance fund

i have been on the same shift for the past 20 years

renrag40 · Post by **renrag40** » 20 Oct 2019, 00:20

I have checked my pension illustrations and there hasn’t been a “value of your benefits” amount since 2014. I’m in section B so my benefits illustration may be different to people in section C. Which section are you in?

linntroika · Post by **linntroika** » 20 Oct 2019, 05:22

renrag40 wrote:I have checked my pension illustrations and there hasn’t been a “value of your benefits” amount since 2014. I’m in section B so my benefits illustration may be different to people in section C. Which section are you in?

I am in section B , every year my benefits have always increased until this year

Post by **RobertT** » 20 Oct 2019, 06:13

Have you checked the info on page 6 of your illustration? Are the figures lower than they should be there too? If so, is there a reason?

If you think there's mistake, I suggest you contact the PSC in Sheffield.

Post by **RobertT** » 20 Oct 2019, 06:14

renrag40 wrote:I have checked my pension illustrations and there hasn’t been a “value of your benefits” amount since 2014. I’m in section B so my benefits illustration may be different to people in section C. Which section are you in?

I think linntroika is referring to the 20x method of working out the value of his pension 'pot', in order to calculate the maximum tax free cash amount allowable.

barcajr · Post by **barcajr** » 20 Oct 2019, 09:24

Have received my Benefit illustration but am none the wiser of how much I'll receive when I reach NRA

renrag40 · Post by **renrag40** » 20 Oct 2019, 18:27

The benefit illustrations no longer give an estimated pension at nra 60 and 65. The last time they did that was the 2016 illustration. They have moved over to what you have earned in pension up to the March of that particular year. Now that we no longer accrue into either pension (other that the interim scheme that is mainly to fund the lump sum of the 2010 to 2018 pension, which is particularly useful for people in section C) you could try and estimate it yourself using the RPI September figures. However the further that you are away from retirement the less accurate you would be. The average September RPI figure for the last 10 years. The average for which has been 2.7%. Bearing in mind that pensionable pay has been rising by RPI since 2014.
So, using a mythical of someone who is 55 and was born on 31st of March and started working for RM on 1st of April 1984. They had pensionable pay of 25k.
Pensionable pay x RPI to the power 5 = pensionable pay at 60..... 25000 x 1.1425 = 28562
Estimated pensionable pay at 60 x accrued years until 2008 /yearly accrual rate( 1/80 section B, 1/60 section C)........
28652 x 24/80 = 8595 per year pension and 25785 lump sum.
Add to this the 2 years accrued from 2008-10...... say 500.
500 x 1.027(to the power 14).......... 500 x 1.452 = 726 per year pension and 2178 lump sum.
So for the nra 60 add the 2 sets of figures together..... 8595 + 726 = 9321 per year pension and 27963.
To find the maximum tax free lump sum..... (yearly pension x industry standard multiplier) + lump sum + AVC if any.
(9321 x 20) + 27963 = 214383..... divide by 4 = 53595
To find the reduced pension..... remaining pension pot divided by 20..... 160787/20 = 8039
So 8039 per year pension with a maximum tax free lump sum of 53595 assuming pensionable pay rose at an average of 2.7% for the next 5 years.
Nra 65 is harder to work out as the cash balance fund is not expected to be in place much beyond September 2020. So if you assumed the cash balance fund lasted for 2.5 years and had 12250 in it ( 25000 x 0.196 x 2.5) and grew at RPI for 9 years. 12250 x 1.027(to the power of 9)= 15569.
Csds pension blocks from 2010 to 2018. In 2019 would be 2500 pension plus 7500 lump sum so multiplying by RPI until 2029 would be...... 2500 x 1.027( to the power of 10) = 3263 with a lump sum of 9789. To get the maximum lump sum ....
(3263 x 20) + 9789 = 75049/4 =18762 of which 15569 is funded by the cash balance fund which means to find the revised pension you add the 15569 to the remaining 56286 then divide the total by 20 = 71855/20 = 3592.
So you have an NRA 60 of 8039 pension and a lump sum of 53595 lump sum.
NRA 65 of 3592 pension and a lump sum of 18762.
Plus the proposed CDC fund from September 2020 with an NRA of 67.
All guess work.

Jefferson Starfish · Post by **Jefferson Starfish** » 20 Oct 2019, 18:38

Where does CDC starting in September 2020 comes from please?

renrag40 · Post by **renrag40** » 20 Oct 2019, 19:45

Nowhere...... in the recent letter we received to say the cash balance fund cannot be taken tax free with the NRA 60 one of the assumptions was the cash balance fund would not go beyond September 2020..... like I said in my last post ..... its all guess work. Personally I would prefer the cash balance fund to continue.

Post by **RobertT** » 21 Oct 2019, 05:02

The cash balance(DBCBS) scheme is currently only 'attached' to our RMPP pensions, which relates to benefits accrued between 2012 and 2018. So the longer it continues, without it also being linked to our RMSPS benefits, the more tax you're likely pay on it. Probably more so for section A/B members because they already get a lump sum as standard.

Duran · Post by **Duran** » 27 Oct 2019, 13:48

I Thought that even though Section B was closed in 2008. The Final salary part of this pension was still active. For instance. if your best pensionable years pensionable pay in say 5 years time was 33k. Your years service in section B. Final salary pension would be based on that. Not when it closed in 2008. am i right or wrong ?

Post by **RobertT** » 27 Oct 2019, 15:04

The way our final salary pensions increased changed in 2014 – we got one of those big red booklets about it at the time. Details and link to that booklet can be found here: https://www.myroyalmail.com/2014%20RM%20Pension%20Plan" onclick="window.open(this.href);return false;

There may also be some info on your annual illustration, it's on page 7 of my section C version.

linntroika · Post by **linntroika** » 30 Oct 2019, 22:29

RobertT wrote:Have you checked the info on page 6 of your illustration? Are the figures lower than they should be there too? If so, is there a reason?

If you think there's mistake, I suggest you contact the PSC in Sheffield.

After 10 days and 4 emails , finally received an email today stating that an error had been made and a new updated illustration would be sent to me in due course - it really does pay to keep an eye on your pension illustration , especially nearing retirement - many thanks