If I take my DBCBS at 60 will it be reduced by 25%

[renrag40]

It’s alright Steph.... I trust you mate
The complexity of it, is all the changes that have been forced on the members since 2008 which means you have to do all sorts of side calculations to get to the final figure....... then to put a feathered hat on it they add in the cash fund that is only for years 2012 to 2018 and there to provide a lump sum which you are already due to receive.
Having said that I’m like you, I would be quite happy for the cash fund to carry on...... as recent events have shown ....what use is a yearly pension when you could be fighting for breathe on a ventilator in a weeks time?.....I’m a happy sod me
I’m giving it some careful thought to taking the 2012 onwards pension as a transfer value and putting it in a SIPP..... at least the cash would be there to pass on to the family...... Mulling over whether I want the hassle of the investment decisions that go with it...... have you looked at this option Steph?
Ps..... Still can’t get over that you think Amazon should pay their fair share of taxes...... not in either of our life times!

[stephen500]

It’s alright Steph.... I trust you mate
The complexity of it, is all the changes that have been forced on the members since 2008 which means you have to do all sorts of side calculations to get to the final figure....... then to put a feathered hat on it they add in the cash fund that is only for years 2012 to 2018 and there to provide a lump sum which you are already due to receive.
Having said that I’m like you, I would be quite happy for the cash fund to carry on...... as recent events have shown ....what use is a yearly pension when you could be fighting for breathe on a ventilator in a weeks time?.....I’m a happy sod me
I’m giving it some careful thought to taking the 2012 onwards pension as a transfer value and putting it in a SIPP..... at least the cash would be there to pass on to the family...... Mulling over whether I want the hassle of the investment decisions that go with it...... have you looked at this option Steph?
Ps..... Still can’t get over that you think Amazon should pay their fair share of taxes...... not in either of our life times!

I will be happy as long as I get £68000 max lumps, first max should be min of £50 k and csdb £12 k, so that gives me £62k max lump sum as min. Just need to other £12 k cash bal scheme to be worth £6 k in cash terms to bring to £68k any thing else is a bonus

[renrag40]

Steph, I’ve just crunched the numbers the way I would work it out and come to....... now don’t bite my head off.....
Lump sum of £74,500.
Yearly pension of £11,180.
Monthly pension of £930.
When you get your pension estimate I would be fascinated to know how accurate the above is...... if only so I know I’m on the right lines to working it out for my own in about 4 years or whether it’s back to the drawing board.
Keep safe Stephie lad.

[stephen500]

Steph, I’ve just crunched the numbers the way I would work it out and come to....... now don’t bite my head off.....
Lump sum of £74,500.
Yearly pension of £11,180.
Monthly pension of £930.
When you get your pension estimate I would be fascinated to know how accurate the above is...... if only so I know I’m on the right lines to working it out for my own in about 4 years or whether it’s back to the drawing board.
Keep safe Stephie lad.

if you are right, I would be more than happy. I think I will get at least £50 k fs sec B, csdb £12 k and I am not sure how it is worked in and How much tax I may pay, but around £12 k cash bal scheme. Making the £74 k you say and you have yearly a bit higher. Happy if both you and I are right. My aim £10k pension and out of lump sum 68k divided by 6 years and 10 months to give me £10k per year to add to my pension giving me £20k a year till my state pension.

[renrag40]

Sounds like a good plan to me.

[stephen500]

Sounds like a good plan to me.

Just out of interest I will share with you my pension illustrations of the years.
They all point to the figures you and me have been debating, I know the early ones won''t include the cash balance scheme.
My biggest worry is not the actual payout. Any lump sum over £68,000 is fine.
But my biggest concern is getting the money on time, they are 4 weeks behind on their 17 week lead time.
So I will prob have to apply in May for payment in November.
I am glad, it is highly unlikely I will be in the new CDC scheme.
I understand those wanting a pension rather than a lump sum as a LS once paid, attracts no rises, either RPI or CPI.
But I hope the investments for CDC are a good as the RMPP, which has a lot of the money tied up in schemes designed not to fluctuate wildly.
In the short term the CDC scheme could be very wild. Pension funds in unprotected schemes have dropped by up to 40% and think if you were taking an annunity on that!
------------------
Attached Jpegs
None except the last include DBCBS as it did not exist!
1) 2008 (pensionable pay of £22653
2) 2013 (pensionable pay £24957 FS and Csdb £25281
3) 2016 (pensionable pay £27063 FS and Csdb £27406) This was the last year the max lump sums were shown. Which gives me an idea of the max lump sum I will get. Here FS shows £56,195 for a reduced FS pension on £8430. Which is in line for what my 2019 shows in terms of comparing unreduced pension of 2016 £9881 and 2019 of £9773. I also an aware that the Cdsb scheme was wound up, so these 65 age figures would not be acheived. I expect with reductions to get £2100 Csdb pension and a lump sum (max) of around £12 to £14K)
4) 2019 (pensionable pay of £28833 and Cash bal pensionable pay of £29,203 giving me DBCBS payment of £5724 to 2019 (year 1 of the scheme) We have just finished year 2 Apr 2020, so that is another £5724 and I plan to retire in Nov 20, so that gives me another £5906 pro rata for 10 months = £4921 (All of this Cash balance scheme is subject to a reduction which could be 5% per year ie 25% or just over (no one knows the actual reduction figure as the RMPP have not given one, but I am going with 5% per year) as I am taking it at 59 years and 10 months) So my cash balance should be around £12000. I will also lose 26% of my Csdb pension as I am taking that at 59 years and 10 months along with 1% of my FS scheme for going a couple of months early. I also lose around 15% for both pensions for taking max lump sums, which is shown in my calculations. Although as I don't know for sure how they will use the Cash balance scheme, that might increase my pension and reduced my lump sum a little. I might have to pay some tax on the lump sum. I am not sure if I will go over the 25%.
I have also included my pay slip ( I know you believe me re Fully pensionable night allowance, but it shows it a reserved rights night allowance. On the right hand side, you can see my pensionable pay rate per week.
However, this is only my workings out and I will be happy if your ball park figures are right!
That will leave me with around £20k a year to live on (lump sum divided up to give me £9k a year combined with my pension of £11K) leaving me with around £13K to play around with.
As I don't have a mortgage, I can live on that.
I have done my time, 43 years and it's time to go!
Btw I know the pension illustrations will not match the actual pensions as some of the Csdb scheme is paid by Capita with part of the FS scheme , so that will increase and the Nra65 scheme will reduce a little (20%?) because the FS scheme will gain from that. Ie the 2008 to 2010 elements. But over all the figures balanced out should be the same.
I will have to add the files in two posts as it only allows so many jpegs
part 1 of 2

[stephen500]

Sounds like a good plan to me.

Just out of interest I will share with you my pension illustrations of the years.
They all point to the figures you and me have been debating, I know the early ones won''t include the cash balance scheme.
My biggest worry is not the actual payout. Any lump sum over £68,000 is fine.
But my biggest concern is getting the money on time, they are 4 weeks behind on their 17 week lead time.
So I will prob have to apply in May for payment in November.
I am glad, it is highly unlikely I will be in the new CDC scheme.
I understand those wanting a pension rather than a lump sum as a LS once paid, attracts no rises, either RPI or CPI.
But I hope the investments for CDC are a good as the RMPP, which has a lot of the money tied up in schemes designed not to fluctuate wildly.
In the short term the CDC scheme could be very wild. Pension funds in unprotected schemes have dropped by up to 40% and think if you were taking an annunity on that!
------------------
Attached Jpegs
None except the last include DBCBS as it did not exist!
1) 2008 (pensionable pay of £22653
2) 2013 (pensionable pay £24957 FS and Csdb £25281
3) 2016 (pensionable pay £27063 FS and Csdb £27406) This was the last year the max lump sums were shown. Which gives me an idea of the max lump sum I will get. Here FS shows £56,195 for a reduced FS pension on £8430. Which is in line for what my 2019 shows in terms of comparing unreduced pension of 2016 £9881 and 2019 of £9773.
4) 2019 (pensionable pay of £28833 and Cash bal pensionable pay of £29,203 giving me DBCBS payment of £5724 to 2019 (year 1 of the scheme) We have just finished year 2 Apr 2020, so that is another £5724 and I plan to retire in Nov 20, so that gives me another £5906 pro rata for 10 months = £4921
I have also included my pay slip ( I know you believe me re Fully pensionable night allowance, but it shows it a reserved rights night allowance. On the right hand side, you can see my pensionable pay rate per week.
I will have to add the files in two posts as it only allows so many jpegs
part 1 of 2

Now part 2 of 2

[renrag40]

Hi Steph...... what can I say...... pretty comprehensive.
The complexity of trying to work these pensions out is verging on the ridiculous.
I can’t see the CDC coming in for at least another year because of Covid19 and also because every major change RM has made to pension provision (2008, 2010, 2014 and 2018) has always been on the 31st March and I don’t see them changing that. They probably do it then because it’s at the end of the tax year so it suits them.
RobertT put a link up on another thread a while back which explained how the interim cash fund would be used. Bobby believed that you added it to the total pension pot, effectively 1/4 of it would then go into the maximum cash free lump sum. I wish I had gone on the link but for 1 reason or another, probably time, I didn’t. I can remember at the time wondering whether he was right (I know, I know it’s heresy and Bobby is spot on every time) because of a couple of reasons
1. The interim cash fund is designed to fund the lump sum of pensions from 2012 to 2018 so no annual pension has to be given up to fund it. Particularly useful to members in Section C.
2. If you add the cash fund to the total pension pot only a quarter of it gets used as a lump sum. The other 3/4s is used to fund the yearly pension. But then I thought is that reasoning correct. Is it semantics and it doesn’t really matter? I ended up tying my self in knots thinking about it.
3. Section B already has the tax free lump sum.
In the end I came down to thinking that given, the main objective of the interim cash fund was to preserve members yearly pensions by funding the lump sum, that the cash fund would replace part of the lump sum which would then be used to increase the yearly pension of members in Section C....... now don’t get me wrong I can see the flaws in this reasoning as well..... but I decided that was the “safest” option when trying to work out my pension. Personally I would prefer that all the cash fund is paid out as a lump sum despite the tax implications.
This is what has lead on to pondering about taking the transfer value to the 2012 to 2018 pension. Especially when I was discussing it with one of the managers where I work who had asked for a transfer value of all his pensions. He was disappointed to be told that all pensions generated pre April 2012 you could not transfer out. But and it was a big but the transfer value of his pensions from 2012 to 2018 was 170k and his interim cash fund for the 1st year was 7k. Now it doesn’t take much to extrapolate from your own interim cash fund 1st year figure to what your transfer value would be. 141k in your case and 121k in mine. Again it may well be flawed thinking to extrapolate figures based on the value of the 1st year interim cash fund totals.The questions I’m pondering long and hard are do I want the hassle that goes with having to make the investment decisions with such a sum and will I actually be offered such a high transfer value..... unless I get off my backside and ask for I quote I will never know.
I was wondering, given that you are going to use the lump sum to tide you over to getting your state pension, whether you had considered transferring out the 2012 to 2018 and the cash fund and putting the sum into a drawdown pension or SIPP?

[RobertT]

The original plan was for the DBCBS to fund the tax free cash 'attached' to all of our pensions, but RM needed Cabinet Office approval for it to be 'attached' to the RMSPS benefits. That approval was rejected and so it only applies to our RMPP(2012-2018) benefits.

Although as RM are responsible for paying some of the inflationary increases associated with the RMSPS, some DBCBS can also be used to fund that part of the RMSPS lump sum.

As I understand it, the order of things will be as follows:

DBCBS funds 25% of RMPP benefits.
DBCBS funds 25% of those RMSPS benefits paid for by RM.
Anything left over is taxed under normal PAYE rules or deferred to take with future benefits, if taken separately.

Section A/B members get a lump sum as standard and I think there used to be an option to give up some or all of that for more pension, although I'm unsure if that is still the case.
There is no option to convert the DBCBS money into more RM pension.

You can get a transfer of RMPP benefits via the CETV process and put that into a personal pension for drawdown, but don't expect it to be more than 20x pension + lump sum(section A/B) + DBCBS.

[stephen500]

Hi Steph...... what can I say...... pretty comprehensive.
The complexity of trying to work these pensions out is verging on the ridiculous.
I can’t see the CDC coming in for at least another year because of Covid19 and also because every major change RM has made to pension provision (2008, 2010, 2014 and 2018) has always been on the 31st March and I don’t see them changing that. They probably do it then because it’s at the end of the tax year so it suits them.
RobertT put a link up on another thread a while back which explained how the interim cash fund would be used. Bobby believed that you added it to the total pension pot, effectively 1/4 of it would then go into the maximum cash free lump sum. I wish I had gone on the link but for 1 reason or another, probably time, I didn’t. I can remember at the time wondering whether he was right (I know, I know it’s heresy and Bobby is spot on every time) because of a couple of reasons
1. The interim cash fund is designed to fund the lump sum of pensions from 2012 to 2018 so no annual pension has to be given up to fund it. Particularly useful to members in Section C.
2. If you add the cash fund to the total pension pot only a quarter of it gets used as a lump sum. The other 3/4s is used to fund the yearly pension. But then I thought is that reasoning correct. Is it semantics and it doesn’t really matter? I ended up tying my self in knots thinking about it.
3. Section B already has the tax free lump sum.
In the end I came down to thinking that given, the main objective of the interim cash fund was to preserve members yearly pensions by funding the lump sum, that the cash fund would replace part of the lump sum which would then be used to increase the yearly pension of members in Section C....... now don’t get me wrong I can see the flaws in this reasoning as well..... but I decided that was the “safest” option when trying to work out my pension. Personally I would prefer that all the cash fund is paid out as a lump sum despite the tax implications.
This is what has lead on to pondering about taking the transfer value to the 2012 to 2018 pension. Especially when I was discussing it with one of the managers where I work who had asked for a transfer value of all his pensions. He was disappointed to be told that all pensions generated pre April 2012 you could not transfer out. But and it was a big but the transfer value of his pensions from 2012 to 2018 was 170k and his interim cash fund for the 1st year was 7k. Now it doesn’t take much to extrapolate from your own interim cash fund 1st year figure to what your transfer value would be. 141k in your case and 121k in mine. Again it may well be flawed thinking to extrapolate figures based on the value of the 1st year interim cash fund totals.The questions I’m pondering long and hard are do I want the hassle that goes with having to make the investment decisions with such a sum and will I actually be offered such a high transfer value..... unless I get off my backside and ask for I quote I will never know.
I was wondering, given that you are going to use the lump sum to tide you over to getting your state pension, whether you had considered transferring out the 2012 to 2018 and the cash fund and putting the sum into a drawdown pension or SIPP?

No , too complicated for me. My head is frazzled as it is. I just want my pension within the year! Hoping your or mine figures are correct. As for converting balance scheme into replacing lost pension (15%). There is not that much to replace. Fs £1300 a year and £600 in the CSDB yearly pension amounts. If the cash bal scheme just replaced lost yearly pension of the NRA 65 scheme. I could perhaps expect to lose £7000 of my DBCBS converted to yearly pension. If DBCBS was used to convert lost lump sum into yearly pension of final salary, that would be a whole different ball game. But as far as I am aware it is mainly for NRA 65 conversion. The good news is they can only convert the DBCBS. So with an increased pension and a lesser lump sum, I would need less to match up the need for a £20k income till my state pension. So I should be fine. I can't believe I am writing this up on Easter Sunday morning. My head hurts and I will get what I am due. Hopefully at least the amount you calculated. Although just reading the 2019 illustration it states "This is the value of the cash balance benefit. This benefit has an NRA of 65 and is payable as a "cash sum""
No mention of conversion to use for reducing loss of cdsb yearly pension to increase max lump sum. My head hurts. £5724 up to 2019.

[renrag40]

Hi Rob, I queried the transfer out amount with him but he brought the paperwork into work and it said the transfer value was 170k which was about 23/24X his 1st year interim cash fund. I tend to agree with Stephen, that it would cause too many headaches having the responsibility of investing it wisely, whatever amount it would be.
Anyway that's the least of our problems at the moment..... I've still got 4 years to go to get it and suddenly over the last 3 months it seems alot further away ....... thank you Sar-Covid 2..... for nothing!!!
Stay safe everybody.

[stephen500]

Hi Rob, I queried the transfer out amount with him but he brought the paperwork into work and it said the transfer value was 170k which was about 23/24X his 1st year interim cash fund. I tend to agree with Stephen, that it would cause too many headaches having the responsibility of investing it wisely, whatever amount it would be.
Anyway that's the least of our problems at the moment..... I've still got 4 years to go to get it and suddenly over the last 3 months it seems alot further away ....... thank you Sar-Covid 2..... for nothing!!!
Stay safe everybody.

I will just be cheesed off If I am forced to stay in Royal Mail after December, because I haven't had my pension, by then. I was planning to apply on 1st June for November.
Tech 2 months early for my NRA60 and 5 years and 2 months early for my NRA65.
I may have to apply in May, if I can, Covid may doom me to another few months at work.

[renrag40]

After serving a 43 year sentence I think you have suffered enough Stephen. Any VR being mooted in your place? That would be handy for you in the next 6 months.
If worse comes to the worse and the delays with Capita continue I would be tempted to take out a loan to bridge the gap between when you want to leave and when you get your pension... it might cost you a couple of hundred quid in interest but might be worth it to you to enable you to avoid the delights of RM during December.

[stephen500]

The original plan was for the DBCBS to fund the tax free cash 'attached' to all of our pensions, but RM needed Cabinet Office approval for it to be 'attached' to the RMSPS benefits. That approval was rejected and so it only applies to our RMPP(2012-2018) benefits.

Although as RM are responsible for paying some of the inflationary increases associated with the RMSPS, some DBCBS can also be used to fund that part of the RMSPS lump sum.

As I understand it, the order of things will be as follows:

DBCBS funds 25% of RMPP benefits.
DBCBS funds 25% of those RMSPS benefits paid for by RM.
Anything left over is taxed under normal PAYE rules or deferred to take with future benefits, if taken separately.

Section A/B members get a lump sum as standard and I think there used to be an option to give up some or all of that for more pension, although I'm unsure if that is still the case.
There is no option to convert the DBCBS money into more RM pension.

You can get a transfer of RMPP benefits via the CETV process and put that into a personal pension for drawdown, but don't expect it to be more than 20x pension + lump sum(section A/B) + DBCBS.

Robert, Sorry I find this hard to follow, no critisim of you, it's just hard with all the pensions and forumlas!:
Apart from my DBCBS being used a little for the inflation part of the RMSPS which Royal Mail are responsible for.
1st question, you may not know the answer to this. I asked Lionel Sampson CWU RMPP trustee and he was not sure. But I am taking my DBCBS at 60 and I asked him, what was the reduction for taking 5 years early. He knew there would be a reduction, but was unsure of the amount. So I have calculated it for myself at 25% or 5% per year. Currently I have £5750 at April 19 and should ahve £5750 Apr 20 and pro rata for 10 months of this year (£5900 whole year) £4916 = £16416. I have taken 25% of that to = £12312. Do you think this sounds about right. (although I think a 25% reduction is a bit steep for 3 years of funding)
The main question I have is you state
"DBCBS funds 25% of RMPP benefits" I am on target to have (March 2019) £3748 pension and £11242 min lump and a max lump sum of £20,982 with £3148 pension (16% reduction for max lump sum) but with a 25% reduction for CSDB (NRA65) taking at 60, that becomes (minus 26% (5 years, 2 months early) and 16% for max lump sum = 42% reduction) a pension (csdb) of £2173 and a min lump sum of £6517 or max lump sum of £14,484. So here is my question with an asumption (taking out and ignoring the small bit for the RMPP inflation part of DBCBS) . It appears to me that if they take some of my DBCBS to negate the reduction in pension to pay the max lump sum of £14,414 , to keep my pension at £2733 (with only 26% reduction for 5 years early and no reduction for max lump sum) that they could use £8960 of my DBCBS to pay for it at a £16 to the £ conversion rate, leaving me with £3040 of out my £12000 DBCBS and a FS pension of approx £9773 with no reduction and min lump of £29,319 or £8209 (15% for max lump and 1% for 2 months early) with a max lump sum of £54,721. So Max lump sums FS £54,271 Csdb £14,414 and DBCBS of £12,000 reduced to £3000 to pay for no reduction in CSDB yearly pension (for taking the max lump sum) = total lump sums of £72,135 and combined FS and Csdb pensions (£8209 + £2773 = £10982)
That sure was long winded. But what I am asking is, will they use my DBCBS to pay for keeping my pension as it would have been without the 15% reduction for taking the max lump sum and if this is what you mean, will the conversion rate be around £16 to 1? I would be happy if is actually as the as the illustration booklet describes it is a "cash balance benefit" [and] "is payable [strictly] as a cash sum" and that I don't have to convert it to keep my pension at the rate it would have been without the 16% reduction for the max lump sum.
Thanks in advance. Stephen. Section B final salary, Csdb and DBCBS. current pensionable pay £28833 and Cash bal pensionable pay £29203 (march 2019)

[stephen500]

After serving a 43 year sentence I think you have suffered enough Stephen. Any VR being mooted in your place? That would be handy for you in the next 6 months.
If worse comes to the worse and the delays with Capita continue I would be tempted to take out a loan to bridge the gap between when you want to leave and when you get your pension... it might cost you a couple of hundred quid in interest but might be worth it to you to enable you to avoid the delights of RM during December.

Vr, I should be so lucky, they tend to come along when you don't want them and not when you do want them.
I wouldn't take the chance with Royal Mail. I want that money in the bank first and as soon as it hits my bank account, 7 days notice will follow.
I just put some figures to Robert, not being sure it they use the DBCBS to reduce the reduction in CSDB pension of 15% to 0%, of approx £54,000 FS max lump £14000 Max lump Csdb and pensions of £8200 FS for 15% reduction for max lump + 1% for 2 months early and £2733 Csdb pension (26% reduction for taking at 5 years and 2 months early)
=£54000 FS max lump
£14000 Csdb max lump
£12000 DBCBS reduced to £3000 (£8000 approx reduced at £16 to £1 conversion rate to keep Csdb pension at unreduced rate ie no 15% reduction for max lump sum.
= £54000 + £14000 + £3000 = £71,000
Pensions of £8200 FS + £2733 Csdb = total pension £10,933
So I use £61,957 to supplement my pension for 6 years 10 months till I get my state pension = £10,933 + £9067 (out of Lump sum) = £20,000 per annum.
leaving me with £9000 spare.
I prefered your figures, which gave me a slightly higher amount in lump sums and pensions and I hope that I can use the DBCBS as strictly cash and do not have to convert it.
I worked out, what I thought the conversion rate would be £16 to £1 (Csdb) (max lump minus min lump and max pension minus min pension with 16% reduction for max lump sum, so difference in max lump and min lump divided by difference betwen max pension and min pension reduced for max lump, which = about £16 to £1). I don't know if that is right or as I said if I have to convert DBCBS to pension to keep it at the pre reduction level for max lump sum? Just glad they did not get permission to use the DBCBS to help fund the FS scheme.
----------------
Although I am hoping your previous figures were right as shown below:
"Steph, I’ve just crunched the numbers the way I would work it out and come to....... now don’t bite my head off.....
Lump sum of £74,500.
Yearly pension of £11,180.
Monthly pension of £930.
When you get your pension estimate I would be fascinated to know how accurate the above is...... if only so I know I’m on the right lines to working it out for my own in about 4 years or whether it’s back to the drawing board.
Keep safe Stephie lad."
Your numbers give me around £14,000 spare. So here is praying you are right!