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

renrag40 · Post by **renrag40** » 13 Apr 2020, 13:46

The only way to get a bigger lump sum whether taxed or not would be to transfer out your 2012 pensions onwards into a draw down pension and then draw it out over a number of years to reduce your tax bill or take it in one go if you are not bothered how much tax you pay. Obviously the problem with that is that you are reducing your annual pension (in your case by about £1500 per year). Also, you would have to seek advice from an IFA by law because the pension pot would be more than 30k and you are moving it from a DB pension to a DC pension. Almost certainly the advice would be not to transfer out but you do not have to follow the IFAs advice, just have proof that you received the advice.
As you have said before Stephen...... brain frazzled. ... they certainly don't make it easy do they?
On top of that of course is the huge hurdle of getting Capita to pay out on time in the first place.

Post by **stephen500** » 13 Apr 2020, 14:50

renrag40 wrote:The only way to get a bigger lump sum whether taxed or not would be to transfer out your 2012 pensions onwards into a draw down pension and then draw it out over a number of years to reduce your tax bill or take it in one go if you are not bothered how much tax you pay. Obviously the problem with that is that you are reducing your annual pension (in your case by about £1500 per year). Also, you would have to seek advice from an IFA by law because the pension pot would be more than 30k and you are moving it from a DB pension to a DC pension. Almost certainly the advice would be not to transfer out but you do not have to follow the IFAs advice, just have proof that you received the advice.
As you have said before Stephen...... brain frazzled. ... they certainly don't make it easy do they?
On top of that of course is the huge hurdle of getting Capita to pay out on time in the first place.

I am just going to apply for the lot in June (or whenever Corona allows me to) hopefully for December and I hope to get all my lump sums and pensions and have some of my DBCBS after they have taken some to pay towards my max lump (Csdb) and keep my pension at the max instead of the min.
I would have rather have had the cash, but I will go with whatever system they have.
It looks like after every thing , I will get lump sums of around £72 to £74k and pensions of around £10,800 to £11,081.
That's with pensionable pay of around £29000 full night allowance -worked nights for 21 years and 27 years in the final salary scheme and is it 8 or 10 in the Csdb combined with 2.75 years in the Cash balance scheme. If you scoll back through this very long thread, you will see all my pension illustrations and all of the ones, which showed the max lump sums (before they stopped showing them) all pointed (pro rata as my pensionable pay has risen) to paying out around £59000 for my FS pension, £14,000 max lump for Csdb and £12,000 for DBCBS (after 26% dedcution for taking 5 years and 2 months early). But it looks like I have to use £9000 of this to pay for my max lump (csdb) and keep my max Csdb pension. Leaving me with around £3000 (minus £600 tax) from Dbcbs. Afer tax I appear to have around £75K lump sums. Pensions appear to be around £8863 FS and £2218 Csdb (26% loss for taking 5 years and 2 months) = £11,081
Any way I have no intention of transferring to a DC scheme, sorry.
I hope to leave before the CDC scheme comes in, then I can claim the £750 for advice, that it appears I do not even have to use for advice. So that can pay my tax bill for the DBCBS (if I have to pay any.) Thoughts?
To a certain extent, I am less bothered about how much I get (within reason) and more, that they pay me out to my time scale. I have had enough of work and don't want to work for one more day than I have too and Dec 1st is my penciled in date, two months before my 60th birthday. Sadly, techincally I may not be seen as a urgent case as I will not actually be classed as being at 60! So it could be delayed a couple of months!
Btw.
Renrag40 on here suggested I would get, with my pensionable pay, service and RR full night allowance.
£74500 lumps and £11,180. pensions, which seems to tally with my figures above, roughly!
--------------------------
This was from 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."

renrag40 · Post by **renrag40** » 13 Apr 2020, 16:02

Hi Stephen, when I worked those figures out I used all your cash fund to cover both the standard lump sum and the extra to take it up to the maximum tax free lump sum for the 2010 to 2018. As RobertT has helpfully informed us that only the extra to take it to the maximum tax free lump sum is covered by the cash fund from 2012 to 2018. The surplus in the cash fund would then be paid out as a lump sum after tax.This will increase your tax free lump sum by a few grand but clip your annual pension by a few hundred. I also increased your 2019 pension figures by 2.4% which is what the increase will be for 2020 and used the figure you provided for what your cash fund will be by November 2020.
This is all too complex for the average bod to work out........ it’s what comes of making 4 major alterations to our pension provision in the space of a decade.... thanks RM!

Post by **stephen500** » 13 Apr 2020, 16:54

renrag40 wrote:Hi Stephen, when I worked those figures out I used all your cash fund to cover both the standard lump sum and the extra to take it up to the maximum tax free lump sum for the 2010 to 2018. As RobertT has helpfully informed us that only the extra to take it to the maximum tax free lump sum is covered by the cash fund from 2012 to 2018. The surplus in the cash fund would then be paid out as a lump sum after tax.This will increase your tax free lump sum by a few grand but clip your annual pension by a few hundred. I also increased your 2019 pension figures by 2.4% which is what the increase will be for 2020 and used the figure you provided for what your cash fund will be by November 2020.
This is all too complex for the average bod to work out........ it’s what comes of making 4 major alterations to our pension provision in the space of a decade.... thanks RM!

I rate myself as reasonably good at working out my pension over the years.
But it got to the stage, I was in danger of melting!
So I am very grateful for your figures and if they turn out to be any near right, I shall sing your praises indeed.
The only thing I have not a lot of idea about is the amount of tax on whats left of the DBCBS (although I think and hope it will be around £600)
The one plus if CDC is not in by the time I take it, I will get another £750 for advice, that I don't intend to ask for. Indeed I will put that towards the tax bill!

renrag40 · Post by **renrag40** » 16 Apr 2020, 01:51

Hi Stephen. I have taken on board what RobertT said about the use of the interim cash scheme to fund the difference in the lump sum between the standard and the maximum lump sum for Section B members of the pension scheme for years 2012 until 2018. Any surplus to be taxed at your marginal rate which is 20%.
Well the good news is I’ve had another crack at your figures

no, no, no applause please!
This time I’ve given it a lot of thought and decided that the pension would have to be worked out in 5 separate calculations across the 2 nras. I’ve used your nett figure for the interim cash fund and taken the other figure from your 2019 pension statement which I have then increase by the RPI figure for last September, 2.4%, to calculate the pension figures for 2020. The nra 60 figure I have multiplied by 0.99133 to account for you taking the pension 2 months early and the nra 65 by 0.74133 to account for the 5 years and 2 months.
NRA 60. Monthly. Annual. Maximum Lump Sum
Upto 2008 £713. £8,557. £57,045.
2008-10. £55. £656. £4,375.
Total nra 60. £768. £9,213. £61,420.

NRA 65. Monthly. Annual. Maximum Lump Sum.
2010-12. £41. £491. £3,273.
2012-18. £123. £1,473. £9,818.
2018+. £5,961.
Total nra 65. £164. £1,964. £19,052.

Total pension. £932. £11,187. £80,472.
The difference between the standard and maximum lump sums for 2012-18 was £4,696 which I deducted from your figure of £12,147 to leave a surplus in the interim cash fund of £7,451 which I then deducted 20% for tax(£1,490) to reach the surplus of £5,961.
Hopefully you understand my methodology.
The upshot of it all is that you were right in the first place with your figures and

I was wrong. I have learnt a lot in the process and enjoyed the mental challenge of it all. Good luck Stephie. I really hope you get your pension early ...... as I have stated before ....... serving a sentence of 43 years in RM is enough suffering for anyone.

renrag40 · Post by **renrag40** » 16 Apr 2020, 01:54

Bloody hell!!!!! I had those figures perfect spaced out when I posted it ........ now they are all scrunched up....... hope you can make sense of them anyway.

Post by **stephen500** » 17 Apr 2020, 00:58

renrag40 wrote:Hi Stephen. I have taken on board what RobertT said about the use of the interim cash scheme to fund the difference in the lump sum between the standard and the maximum lump sum for Section B members of the pension scheme for years 2012 until 2018. Any surplus to be taxed at your marginal rate which is 20%.
Well the good news is I’ve had another crack at your figures no, no, no applause please!
This time I’ve given it a lot of thought and decided that the pension would have to be worked out in 5 separate calculations across the 2 nras. I’ve used your nett figure for the interim cash fund and taken the other figure from your 2019 pension statement which I have then increase by the RPI figure for last September, 2.4%, to calculate the pension figures for 2020. The nra 60 figure I have multiplied by 0.99133 to account for you taking the pension 2 months early and the nra 65 by 0.74133 to account for the 5 years and 2 months.
NRA 60. Monthly. Annual. Maximum Lump Sum
Upto 2008 £713. £8,557. £57,045.
2008-10. £55. £656. £4,375.
Total nra 60. £768. £9,213. £61,420.

NRA 65. Monthly. Annual. Maximum Lump Sum.
2010-12. £41. £491. £3,273.
2012-18. £123. £1,473. £9,818.
2018+. £5,961.
Total nra 65. £164. £1,964. £19,052.

Total pension. £932. £11,187. £80,472.
The difference between the standard and maximum lump sums for 2012-18 was £4,696 which I deducted from your figure of £12,147 to leave a surplus in the interim cash fund of £7,451 which I then deducted 20% for tax(£1,490) to reach the surplus of £5,961.
Hopefully you understand my methodology.
The upshot of it all is that you were right in the first place with your figures and I was wrong. I have learnt a lot in the process and enjoyed the mental challenge of it all. Good luck Stephie. I really hope you get your pension early ...... as I have stated before ....... serving a sentence of 43 years in RM is enough suffering for anyone.

Whether you are right or not, I shall be more than pleased if you are right. Thank you for attempting this calculations. I racked my brains for a good part of the bank holiday weekend, trying to get them right. I will apply on prob June 1st and will let you know. Btw I have seen the pension forms to fill in from colleagues and they look scary. So I shall be asking advice here! Thanks again . Nb having given it some thought I think you are about 2k too much for NRA 60 lump max and I am going with £59 k for that. But I will be happy if you are right. But thinking again, with inflation rise and possible pay rise Apr 20 (due) you may be right.

Post by **stephen500** » 17 Apr 2020, 07:32

stephen500 wrote:
renrag40 wrote:Hi Stephen. I have taken on board what RobertT said about the use of the interim cash scheme to fund the difference in the lump sum between the standard and the maximum lump sum for Section B members of the pension scheme for years 2012 until 2018. Any surplus to be taxed at your marginal rate which is 20%.
Well the good news is I’ve had another crack at your figures no, no, no applause please!
This time I’ve given it a lot of thought and decided that the pension would have to be worked out in 5 separate calculations across the 2 nras. I’ve used your nett figure for the interim cash fund and taken the other figure from your 2019 pension statement which I have then increase by the RPI figure for last September, 2.4%, to calculate the pension figures for 2020. The nra 60 figure I have multiplied by 0.99133 to account for you taking the pension 2 months early and the nra 65 by 0.74133 to account for the 5 years and 2 months.
NRA 60. Monthly. Annual. Maximum Lump Sum
Upto 2008 £713. £8,557. £57,045.
2008-10. £55. £656. £4,375.
Total nra 60. £768. £9,213. £61,420.

NRA 65. Monthly. Annual. Maximum Lump Sum.
2010-12. £41. £491. £3,273.
2012-18. £123. £1,473. £9,818.
2018+. £5,961.
Total nra 65. £164. £1,964. £19,052.

Total pension. £932. £11,187. £80,472.
The difference between the standard and maximum lump sums for 2012-18 was £4,696 which I deducted from your figure of £12,147 to leave a surplus in the interim cash fund of £7,451 which I then deducted 20% for tax(£1,490) to reach the surplus of £5,961.
Hopefully you understand my methodology.
The upshot of it all is that you were right in the first place with your figures and I was wrong. I have learnt a lot in the process and enjoyed the mental challenge of it all. Good luck Stephie. I really hope you get your pension early ...... as I have stated before ....... serving a sentence of 43 years in RM is enough suffering for anyone.
Whether you are right or not, I shall be more than pleased if you are right. Thank you for attempting this calculations. I racked my brains for a good part of the bank holiday weekend, trying to get them right. I will apply on prob June 1st and will let you know. Btw I have seen the pension forms to fill in from colleagues and they look scary. So I shall be asking advice here! Thanks again . Nb having given it some thought I think you are about 2k too much for NRA 60 lump max and I am going with £59 k for that. But I will be happy if you are right. But thinking again, with inflation rise and possible pay rise Apr 20 (due) you may be right.

Post by **stephen500** » 01 May 2020, 16:21

renrag40 wrote:Hi Stephen. I have taken on board what RobertT said about the use of the interim cash scheme to fund the difference in the lump sum between the standard and the maximum lump sum for Section B members of the pension scheme for years 2012 until 2018. Any surplus to be taxed at your marginal rate which is 20%.
Well the good news is I’ve had another crack at your figures no, no, no applause please!
This time I’ve given it a lot of thought and decided that the pension would have to be worked out in 5 separate calculations across the 2 nras. I’ve used your nett figure for the interim cash fund and taken the other figure from your 2019 pension statement which I have then increase by the RPI figure for last September, 2.4%, to calculate the pension figures for 2020. The nra 60 figure I have multiplied by 0.99133 to account for you taking the pension 2 months early and the nra 65 by 0.74133 to account for the 5 years and 2 months.
NRA 60. Monthly. Annual. Maximum Lump Sum
Upto 2008 £713. £8,557. £57,045.
2008-10. £55. £656. £4,375.
Total nra 60. £768. £9,213. £61,420.

NRA 65. Monthly. Annual. Maximum Lump Sum.
2010-12. £41. £491. £3,273.
2012-18. £123. £1,473. £9,818.
2018+. £5,961.
Total nra 65. £164. £1,964. £19,052.

Total pension. £932. £11,187. £80,472.
The difference between the standard and maximum lump sums for 2012-18 was £4,696 which I deducted from your figure of £12,147 to leave a surplus in the interim cash fund of £7,451 which I then deducted 20% for tax(£1,490) to reach the surplus of £5,961.
Hopefully you understand my methodology.
The upshot of it all is that you were right in the first place with your figures and I was wrong. I have learnt a lot in the process and enjoyed the mental challenge of it all. Good luck Stephie. I really hope you get your pension early ...... as I have stated before ....... serving a sentence of 43 years in RM is enough suffering for anyone.

My calcs revisited, with the help of using a friends quote as template.
NRA 60 FS pension = £8209.32 (with 16% reduction, 15% for max LS and 1% for 2 months early
NRA 60 2008-10 = £749.60 Total NRA 60 pension = £8958.92
NRA 65 Pension (with 26% reduction , 5 yrs and 2 mnths) = 2248.80
Total yearly pensions =£ 11207.72
Lump sums FS (with Nra 65 2008-10) £59725
Csdb 2010-2018 £6746 (min LS)
DBCBS £8246 (making up to max LS) Tax free
= max lump sum £ 14992
Excess DBCBS fund £3290 (subject to tax, but is the whole figure here of £3290 subject to tax?)
Total Lump sums =£78007
minus tax (£3290 -20%) minus £658
Total LS =£ £77349
I forgot the small reduction for 2008 to 10, 1% of £749.60 for taking two months early. Not worth bothering about.
Plus unlike yourself, I have not included pay rises for FS and inflation rises for 2019 to 20 and Apr 20 to Dec 20.
So your figure may be a little bit closer than mine.

renrag40 · Post by **renrag40** » 02 May 2020, 01:15

Hi Stephen. I would have thought that you would pay tax on all of the excess DBCBS cash given that you have already earned over your non taxable allowance for this tax year.
Here’s something I’m musing on at the moment but haven’t really looked into yet......... given that the pension was close in 2018 to all future accrual....... are we all now classed as deferred members? ........ this won’t matter to Section C members but it will to Section B members.

Post by **RobertT** » 02 May 2020, 04:09

renrag40 wrote:Hi Stephen. I would have thought that you would pay tax on all of the excess DBCBS cash given that you have already earned over your non taxable allowance for this tax year.
Here’s something I’m musing on at the moment but haven’t really looked into yet......... given that the pension was close in 2018 to all future accrual....... are we all now classed as deferred members? ........ this won’t matter to Section C members but it will to Section B members.

Anyone who is paying into the DBCBS is an active member of the RMPP, only those who've chosen to opt out of the DBCBS or have left RM employment are deferred.
It's an important difference for section C members in particular, because their pensions will only be increasing by CPI rather than RPI.

Whether tax is payable on the DBCBS is probably more pertinent for section A/B members because they have a standard lump sum. But as the DBCBS is only 'attached' to 2012-2018 benefits, I assume they'll be the option to give up some of that standard lump sum for more pension, rather than pay tax on the DBCBS?

As a section C member myself, I estimate that my DBCBS pot is currently worth around 19-20% of my 2012-2018 pot value. So I only need to pay into it for another 3-4 months before I'm effectively building up a taxable lump sum, rather than a tax free one.

Post by **stephen500** » 02 May 2020, 10:58

RobertT wrote:
renrag40 wrote:Hi Stephen. I would have thought that you would pay tax on all of the excess DBCBS cash given that you have already earned over your non taxable allowance for this tax year.
Here’s something I’m musing on at the moment but haven’t really looked into yet......... given that the pension was close in 2018 to all future accrual....... are we all now classed as deferred members? ........ this won’t matter to Section C members but it will to Section B members.
Anyone who is paying into the DBCBS is an active member of the RMPP, only those who've chosen to opt out of the DBCBS or have left RM employment are deferred.
It's an important difference for section C members in particular, because their pensions will only be increasing by CPI rather than RPI.

Whether tax is payable on the DBCBS is probably more pertinent for section A/B members because they have a standard lump sum. But as the DBCBS is only 'attached' to 2012-2018 benefits, I assume they'll be the option to give up some of that standard lump sum for more pension, rather than pay tax on the DBCBS?

As a section C member myself, I estimate that my DBCBS pot is currently worth around 19-20% of my 2012-2018 pot value. So I only need to pay into it for another 3-4 months before I'm effectively building up a taxable lump sum, rather than a tax free one.

I have a friends quote for NRA 65 and it lists:
Tax free lump sum: = min lump sum £7202.53
Tax free cash lump sum DBCBS fund 8803.07
Total tax free cash = £16005.60 This equals what would have been the max lump sum that would have been payable with the 15% reduction in pension, it includes £8803.07 of his DBCBS.
Now this postperson gets it and does not have their pension reduced at all.
But there is also : Excess DBVBS fund of £3710.04
If you add £8803.07 to £3710.04 it comes to the total DBCBS pot of £12513.11.
So I presume this postperson pays tax on the whole "excess DBCBS fund of £3710.04
My excess DBCBS fund should be £3290 and I presume I will pay tax on that of £658 (20%) as I can't see me falling into the 40% tax bracket from current yearly tax bands.
For your info, you prob know this.
There are about 5 options for NRA65.
The ones you spoke about above may interest you.
Option 3, I don't understand.
But option 3B , you give up (section B) all of your standard lump sum and have an increased pension and get all of your DBCBS as cash tax free. But this postperson only gains £233 a year and loses £7202.53 min lump sum. In other words he would have to live 30 years to make up the money lost by giving up the min lump sum (£7202.53 divided by £233).
That postman and yourself, would have to be mad to do that.
I will be taking option 2A, which is full pension (unreduced) + Min lump sum + Part of DBCBS lump sum to take lump sum to what would have been my max lump sum (without any reduction on yearly pension) and also to have excess DBCBS monies, which I presume I will pay tax on of 20%.
I personally, and this is not financial advice (disclaimer to all readers) think option 2A is the most tax efficent way to use my DBCBS lump sums.
yes I will pay tax of £658 but I will get my min lump sum and have it made up to my max lump sum by the DBCBS scheme.
That is much better than option 3B which would result in getting all the DBCBS monies tax free, but lose all of the min lump sum to gain a small rise in pension of a couple of hundred pounds, madness.
I have manipulated the above figures, but kept the ratios the same, so as to keep private the NRA quote seen.

Post by **RobertT** » 02 May 2020, 19:09

I was just pointing out section A/B members do have the option to give up some or all of their lump sum in return for more pension. Whether anyone choose to do that is obviously up to them based on their figures.

But the numbers you quote seem to suggest a commutation rate of roughly 31:1, which is rubbish!!!!

Post by **stephen500** » 02 May 2020, 19:17

RobertT wrote:I was just pointing out section A/B members do have the option to give up some or all of their lump sum in return for more pension. Whether anyone choose to do that is obviously up to them based on their figures.

But the numbers you quote seem to suggest a commutation rate of roughly 35:1, which is rubbish!!!!

You are right to point out choices. It is with your help and others on here, that I have begun to get a grasp of my pension and what I can expect.
So I thank you all.
As for option 3B where we get a couple of hundred pounds extra pension for giving up a lump sum, rubbish does not do it justice.
It would take over 30 years of retirement to make up that loss!

Post by **stephen500** » 02 May 2020, 20:19

renrag40 wrote:Hi Stephen. I would have thought that you would pay tax on all of the excess DBCBS cash given that you have already earned over your non taxable allowance for this tax year.
Here’s something I’m musing on at the moment but haven’t really looked into yet......... given that the pension was close in 2018 to all future accrual....... are we all now classed as deferred members? ........ this won’t matter to Section C members but it will to Section B members.

As Robert T said in reply to this: I am still paying into the DBCBS fund and as it is part of RMPP, am still classed as an active member.