Breaking - RMPP RMSPS - update on tax- 18 1st June application for winter payment 2020, diary time line

[nataddick]

NRA 65 Commutation factors provided to me this month :-

RMSPS 17.46 and RMPP 19.11 - not sure of reason for different rates other than separate scheme rules ?

Actually, not relevant to me personally, as I will not be exchanging any pension for cash - will be using DBCBS, Flexiplan and Bonusplan to fund my lump sum needs.

[nataddick]

Found this tucked away in my bookmarks - very useful guide on taking pension lump sums - scroll down for DB schemes !

https://www.which.co.uk/money/pensions- ... ch15b2sgly" onclick="window.open(this.href);return false;

[fly-catchers]

Thanks for this Robert.

Do you think they will ever allow section c members to use their avcs to buy a higher annual NRA 60 pension?

There used to be an added years AVC which bought extra final salary service, but that was stopped for new applicants in 2008 and I think existing contributors in 2018.

I seem to remember some years ago(20 years+) there was a proposal to enable us to use Bonusplan and/or Flexiplan cash to buy more service, but it didn't actually happen. Although I could also be remembering incorrectly?

So considering.....

The RMPP is closed to future accrual and will close completely once the CDC scheme starts.
The added years AVC option stopped some time ago.
i think it was previously considered and discounted when the RMPP was still fully open.
The scheme/s liabilities would probably increase.

….then I would say there is no possibility whatsoever.

EDIT: According to the RMPP website, existing contributors(pre 2008) to Addplan can currently still pay into it: https://www.royalmailpensionplan.co.uk/ ... n-benefits" onclick="window.open(this.href);return false;

You were right before the edit! They closed Added Years after 31st March 2018. I was very lucky my Added Years matured in January that year!

[stephen500]

I expected my max lump sum NRA 60 and NRA65 (RMSPS only) to be £58921
Whereas it is £67312.06 (an extra £8391 more than I expected) and a pension of £1200 more than I expected.

Hi Stephen, glad things seem to be progressing nicely. Out of curiosity why do you think you were so far out with your original RMSPS calculation?
I know there is the additional 2 years for the NRA65 which you didn't factor in but the amounts are too far apart for this to be the only reason.
Out of interest when did you start paying into the pension scheme as you are Section B like me? I started in 1979 and have just taken my NRA60 at full term and got a PCLS of just under £62K which is pretty much what I was expecting after having worked it out using our last annual illustration to March 2019 and adding a bit on for inflation.

I will give more details over the next few days, I have received my second quote. For the annual pension I seem spot on, it is the lump sums that I seem way out on and that appears to be because of the cash bal scheme. I won't know yet until I have sent annex b off and then I get my quote with DBCBS incorporated into NRA60. I noticed 2 things, 1) it does not make any difference for section B, whether you take min or max LS as to how much your widow gets. It is half of the max yearly pension and only gets higher if you chose, I think option 3 or 3B. So my wife will get when I die around £6700 per year and more if I die before I have had my pension for 5 years. I have to ring RMPP tomorrow as I think they have made a small error . My NRA 65 (RMPP 6 years) has a pension of £1751.82 and a min lump of £5767.35 which is not, as it should be 3 times £1751.32. My reduced pension is £1531.32 and max LS without DBCBS is £10208.82 which is 6.66 x £1531.32 which is correct. So I think, they have got standard benefit pension amount wrong by about £200, which if I am right, knocks my LS down by about a grand. I will provide figures and letters later. But from quotes so far pension should be around £11648. And lump sums so far with DBCBS factored in, (as I have not sent that off yet is around £77000, and I think DBCBS included with tax deducted will take it to about £81000. I thought I would get £74000. I have £77000 already with £11017 in DBCBS to be worked in. Happy to be out and hopefully will have around another £7000 more than expected

[stephen500]

It also looks like I have 2 years nra65 money, showing as NRA65 from RMSPS. However my last year's illustration 2019 was showing £9779 as my max pension. Let's say I add £200 to that for inflation. Making that £9979. My RMSPS NRA 60 estimate shows £1121. Now I am guessing here. Only 2 years of my NRA65 seem to be showing in their NRA 65. Bear with me £11211 minus 16% for max LS and 2 months early = £9417.24 , now if I also take off the £519.34 × 2 (another 2 years from NRA 65??) (£1039.08) That takes me down to £8544. Which is reduced Pension for max LS. Well would have been without 2 years added to it. That's my explanation? Some how 4 years of my nra65 is in There 2008 to 2012. Spilt between mra60 and nra65. My head hurts.

[stephen500]

It also looks like I have 2 years nra65 money, showing as NRA65 from RMSPS. However my last year's nra 60 illustration 2019 was showing £9779 as my max pension. Let's say I add £200 to that for inflation. Making that £9979. My RMSPS NRA 60 estimate shows £11121. Now I am guessing here. Only 2 years of my NRA65 seem to be showing in their NRA 65. Bear with me £11211 minus 16% for max LS and 2 months early = £9417.24 , now if I also take off the £519.34 × 2 (another 2 years from NRA 65 to new 60??) (£1039.08) That takes me down to £8544. Which is reduced Pension for max LS. Well would have been without 2 years added to it. That's my explanation? Some how 4 years of my nra65 is in There 2008 to 2012. Spilt between mra60 and nra65. My head hurts.

[stephen500]

Ok. In tbe morning i wilk set out all my pension facts as I know them. I have been in the FS nra 60 scheme for over 27 years and in the Csdb for 10 and in the DBCBS for 2 years and when I leave in Nov, another 7 months. I have reserved rights as a PHG with full night allowance. I will give you the actual figures later. But my pensionable pay is around £27000. My 2019 illustration nra 60 gave me £9779 approx and £29000 min LS. My NRA 65 was 3740 and min LS of around £11000. My estimated just received are for nra60 of £11,211 pension an £33000 min LS or £9577 pension and max LS of £63848. (RMSPS) NRA 65 (RMSPS) £519.54 and max lump of £3463.59. Today I got my first RMPP estimate which does not include DBCBS yet and is for 6 years of my NRA 65 , that is £1531.32 pension and max of £10208.82. Standard pension is £1751.82 (which I think is £200 out as my standard min LS is £5767.35 and that should be £1751.82 ×3. So, so far that gives me allowing for the DBCBS to take my pension back up to the standard amount around £11800. And lump sums so far £63000 plus £3400, plus £10000 nra65 with DBCBS yet to be added =£77000.(no DBCBS yet) But I expect DBCBS to be incorporated to take my nra65 lump to £15000 with paying tax of around £1300 on excess. Giving me LSums of around £81,000. I will show you the forms later this morning. My cash balance are £5750 ×2 plus 7 months of £5900. Minus 26% for taking 5 years 2 months early, which should give me £11017, to take my NRA65 pension to the max LS and retain the standard pension. There will be an excess taxable at 20%.

[RobertT]

Thanks for this Robert.

Do you think they will ever allow section c members to use their avcs to buy a higher annual NRA 60 pension?

There used to be an added years AVC which bought extra final salary service, but that was stopped for new applicants in 2008 and I think existing contributors in 2018.

I seem to remember some years ago(20 years+) there was a proposal to enable us to use Bonusplan and/or Flexiplan cash to buy more service, but it didn't actually happen. Although I could also be remembering incorrectly?

So considering.....

The RMPP is closed to future accrual and will close completely once the CDC scheme starts.
The added years AVC option stopped some time ago.
i think it was previously considered and discounted when the RMPP was still fully open.
The scheme/s liabilities would probably increase.

….then I would say there is no possibility whatsoever.

EDIT: According to the RMPP website, existing contributors(pre 2008) to Addplan can currently still pay into it: https://www.royalmailpensionplan.co.uk/ ... n-benefits" onclick="window.open(this.href);return false;

You were right before the edit! They closed Added Years after 31st March 2018. I was very lucky my Added Years matured in January that year!

RM's original plan in 2018 was to close the RMPP completely and move everyone into the DC scheme. But as they actually decided to keep the RMPP open(not to future accrual) and introduce the transitional DBCBS, then maybe they didn't close Addplan for those already contributing after all?

The official website seems to suggest that's the case - I would hope it's showing the correct information!

[stephen500]

I said that I would provide detailed notes of my pension illustrations and RMSPS estimate, pensionable pay and service, along with my first intial RMPP quote, that does not include DBCBS yet, till I return the forms.
Here are the facts.
I rejoined RM on 19th Jan 1981.
I have had 27 years and 42 days in Section B final salary scheme.
I have 10 blocks of CSDB 2008-2018.
My pensionable pay at 31st March 2019 was £28,833
My Cash balance pensionable pay at 31st March 2019 was £29203.
My weekly contributional pay is current (2020) £579.54 per week and yearly £30106.08
At 2019 I had one year of cash balance service at £5724
I think it was the same for 2020, so that is 2 x £5724
It appears based on my weekly contrib pay to now be £5906.
I will be entitled to a cash balance of £5724 x 2 and £3455 (pro ration) till Nov 20.
Equaling £14903 minus 26% (taking 5 years and 2 months early)
Leaving me with a Cash balance of £11028. (approx)
That will be incorporated into my NRA65.
I have reserved rights as a PHG and I have full night allowance.
So
2019 ILLUSTRATION
NRA60 Standard pension without reduction £9773
NRA60 min Lump Sum £29,319
NRA65 CSDB Pension blocks £3748.
NRA65 CSDB min Lump sum £11,242.
Csdb one block £5724
Acutal received Pension estimates
RMSPS NRA 60 Standard pension £11,211.58
NRA60 min Lump Sum £33,770.89 (this now seems to be 3.012 x rather than old 3 times)
Spouse pension £5605.79
RMSPS NRA 60 reduced pension £9577.33 (1% reduction for 2 months early)
RMSPS NRA 60 max lump sum £63,818.87 (conversion rate 6.66)
Spouse pension £5605.79 (no change)
RMSPS NRA 65 pension £600.34
RMSPS NRA 65 min Lump sum £1976.44 (Out of interest this used to be 3 times the pension but here is 3.29 x the pension)
RMSPS NRA65 reduced pension £519.54 (this can only be 2 years NRA65)
(as my original CSDB was £3748 and 20% of that minus 26% for early payment= £554)
So where are the other 2 years of the CSDB pension, is that in the NRA60 total)
RMSPS NRA65 Max lump sum £3463.59 (once again a conversion rate of 6.66)
------------------
Now New RMPP quote
Table C taking NRA 60 and 65 (NRA65 reduction 26% for taking 5 years and 2 months early
Was in illustration £3748) 40% gone to RMSPS pension, 6 years left.
NRA 65 RMPP standard benefit £1751.82
NRA 65 RMPP min lump sum £5767.35
NRA 65 RMPP reduced pension £1531.32 (which is actually a 13% reduction and I thought it would be 15%)
NRA 65 RMPP max lump sum £10,208.82
None of this includes the DBCBS of which I will have around £11,028 after 26% reduction)
I have to send the paper work off and the DBCBS will be incorporated into the NRA65..
So I have so far
RMSPS pensions of £9577.33 + £519.54 + £1751.82 (once DBCBS scheme is added I will take this standard pension, because max lump will be made up by DBCBS)
= total pensions of £11,848.60
Lump sums so far of £63848.17 + £3463.59 + 10208.82 = £77520.58
DBCBS to come.
_______________
Now here are my estimates for the NRA 65 incorporated into the NRA65 and the effect on my lump sum for NRA65.
£1751.82 x 20 (£35024) + min lump sum £5767.35 (= pension pot of £40,791.35) of which 25% is max allowed tax free = £10,197.83
DBCBS = £11,028 (with reductions made of 26%)
So lump sums
£5767.35 min lump sum
£4430.48 DBCBS tax free (taking me up to 25% tax free amount)
£10197.83
£6597.52 excess DBCBS taxable at your tax rate ( I think mine will be 20%, as I will not be earning after Nov 30th 2020 and will have paid excess tax already)
£1319.50 tax (20%)
---------------------------------------------------------------------
£15476.35 Total NRA65 lump sum incorprating DBCBS
£63848.17 NRA 60 max LS (RMSPS)
£3462.59 NRA 65 (RMSPS)
£82,787.11 combined Lump sums incorporating DBCBS.
-----------------------------
I was expecting the £11,000 odd pensions
But I was only expecting £74,000 max lump sums.
The DBCBS is my estimate and I await the actual figures, once I have returned the paper work. But I already have what I need to retire and the rest would be a bonus.
I enclose all the paperwork I have received.
I don't totally understand where the 40% of my CSDB scheme has gone, because it is plainly not all in the NRA 65 element of RMSPS, as that is not enough bearing in mind the original figure was £3774 and 40% of that is £1509 and even with a further 26% reduction for taking early, reduced it to only £1117. Where the NRA65 element shows as £519? which appears to be 2 years worth of CSDB
So I am guessing some is in the NRA60?
Just spoke to RMPP and they think that 2 years go into the NRA60 and 2 years into the NRA65 (RMSPS)
He also said, that in his opinion, and he will check, the reduction for taking early payment for DBCBS is around 0.5% per year, so my reduction would be around 2.5 to 3% rather than the 25.8% one of his colleagues told me yesterday. I guess I will soon know.
I will send forms off on Sat, recorded delivery and once final estimates are returned, those by special delivery.
Btw, he said not to worry that mulipler of pension was 3.29 v 3.
-------------
attachments to follow here

2019 illustration.jpg

2019 pensionable pay.jpg

2019 illustration.jpg

more to follow

[stephen500]

pen 4.jpg

RMPP NRA 65.jpg

RMPP annex B (1).jpg

[stephen500]

RMSPS spouse.jpg

Note Spouse pension does not change, whether your choose min or max lump sums, here, but goes a bit higher if you choose options 3 and 3B of form not showing, which I never would as you give up all your lump sum for a tiny increase in your pension, that would take 30 years to recoup.
Note I should get widow pensions of
£875.91 NRA 65 (RMPP)
£5605.79 NRA 60 (RMSPS)
£300.17 NRA 65 (RMSPS)
£6781.87 total widows pension.
If I die on day one of my retirement my spouse gets 5 years of my pension and the first 90 days of my pension as a lump sum and here spouse pension as well. This 5 years dimishes from day 1 to the end of the 5 years. ie if i die on year 4, she gets a year of my pension and continues with the widows pension.

[stephen500]

I expected my max lump sum NRA 60 and NRA65 (RMSPS only) to be £58921
Whereas it is £67312.06 (an extra £8391 more than I expected) and a pension of £1200 more than I expected.

Hi Stephen, glad things seem to be progressing nicely. Out of curiosity why do you think you were so far out with your original RMSPS calculation?
I know there is the additional 2 years for the NRA65 which you didn't factor in but the amounts are too far apart for this to be the only reason.
Out of interest when did you start paying into the pension scheme as you are Section B like me? I started in 1979 and have just taken my NRA60 at full term and got a PCLS of just under £62K which is pretty much what I was expecting after having worked it out using our last annual illustration to March 2019 and adding a bit on for inflation.

I started paying in around 19 Jan 1981, and have 27 years and 42 days in the final salary scheme, with 10 csdb blocks, and one year of cash balance till 2019, now 2 years and soon another 7 months. My pensionable pay is around £29,000 reserved rights PHG full night allowance.
I have given detailed figures of my illustrations below on page 3 of this thread (above my reply, have a look and tell me what you think)
and my actual estimates I have received. But it does not include DBCBS, which does not come till I send the forms back, which I will do on Sat. I have made an estimate of my NRA65 with DBCBS incoporated.
Out of interest. My NRA 60 max LS is £63,000 and my NRA 65 (RMSPS ) is £3400, that takes that to £67,000. My max Lump sum of RMPP NRA65 is £10,000 . That equals £77000. But I think when DBCBS of £11018 is added to max lump sum of NRA 65 (RMPP) I think it will jump to £82,000. But I won't know that till I get that quote back.
The actual pensions we were almost spot on. I was £3 out. But the lump sums are £8000 more than expected if the DBCBS comes in as I expect. Was Happy to be wrong with that.

[deltaforce]

All I can add is .How did it all become so mind bending confusing? I like to think I’m a bit savvy with money but the Royal Mail pension schemes take confusion to a new level.

[Steve_claret]

I will give more details over the next few days, I have received my second quote. For the annual pension I seem spot on, it is the lump sums that I seem way out on and that appears to be because of the cash bal scheme. I won't know yet until I have sent annex b off and then I get my quote with DBCBS incorporated into NRA60. I noticed 2 things, 1) it does not make any difference for section B, whether you take min or max LS as to how much your widow gets. It is half of the max yearly pension and only gets higher if you chose, I think option 3 or 3B. So my wife will get when I die around £6700 per year and more if I die before I have had my pension for 5 years. I have to ring RMPP tomorrow as I think they have made a small error . My NRA 65 (RMPP 6 years) has a pension of £1751.82 and a min lump of £5767.35 which is not, as it should be 3 times £1751.32. My reduced pension is £1531.32 and max LS without DBCBS is £10208.82 which is 6.66 x £1531.32 which is correct. So I think, they have got standard benefit pension amount wrong by about £200, which if I am right, knocks my LS down by about a grand. I will provide figures and letters later. But from quotes so far pension should be around £11648. And lump sums so far with DBCBS factored in, (as I have not sent that off yet is around £77000, and I think DBCBS included with tax deducted will take it to about £81000. I thought I would get £74000. I have £77000 already with £11017 in DBCBS to be worked in. Happy to be out and hopefully will have around another £7000 more than expected

I agree that when taking all of the pensions at the same time like yourself or just the NRA65 part of the RMPP the DBCBS pot of money does tend to be an added complication to the calculations. The main thing is that you appear to be wrong on the right side if that makes sense and that it looks as though you should come out of this with more than enough to retire on. Happy days.

[stephen500]

I will give more details over the next few days, I have received my second quote. For the annual pension I seem spot on, it is the lump sums that I seem way out on and that appears to be because of the cash bal scheme. I won't know yet until I have sent annex b off and then I get my quote with DBCBS incorporated into NRA60. I noticed 2 things, 1) it does not make any difference for section B, whether you take min or max LS as to how much your widow gets. It is half of the max yearly pension and only gets higher if you chose, I think option 3 or 3B. So my wife will get when I die around £6700 per year and more if I die before I have had my pension for 5 years. I have to ring RMPP tomorrow as I think they have made a small error . My NRA 65 (RMPP 6 years) has a pension of £1751.82 and a min lump of £5767.35 which is not, as it should be 3 times £1751.32. My reduced pension is £1531.32 and max LS without DBCBS is £10208.82 which is 6.66 x £1531.32 which is correct. So I think, they have got standard benefit pension amount wrong by about £200, which if I am right, knocks my LS down by about a grand. I will provide figures and letters later. But from quotes so far pension should be around £11648. And lump sums so far with DBCBS factored in, (as I have not sent that off yet is around £77000, and I think DBCBS included with tax deducted will take it to about £81000. I thought I would get £74000. I have £77000 already with £11017 in DBCBS to be worked in. Happy to be out and hopefully will have around another £7000 more than expected

I agree that when taking all of the pensions at the same time like yourself or just the NRA65 part of the RMPP the DBCBS pot of money does tend to be an added complication to the calculations. The main thing is that you appear to be wrong on the right side if that makes sense and that it looks as though you should come out of this with more than enough to retire on. Happy days.

It is very confusing as to where the 40% from NRA65 goes too, as you can see from my quotes, there is no way that £514 NRA65 (Rmsps) is two years worth of £3774 even with 26% reduction for early payment or another 15% for taking max lump sum, so perhaps 20% is there and the other 20% in NRA60, well thats what the helpline guy thought. The pension we both thought I would get, it looks like we were spot on, around £11800. The NRA60 max lump seems to match yours. The other £3400 is NRA65 (rmsps). The NRA 65 (RMPP) is £1700 odd with no deductions for early payment once DBCBS is factored in and before DBCBS is nearly £6k min and £10K max. But I think, see my calculations (which I hope are right!!!) I think with DBCBS scheme that will rise to about £15K (from memory) (remember that is worth £11k on it's own with reductions for early payment, speaking of which, there are disputes between helpline workers as to the reduction, one says I am right, about 26% for 5 yrs 2 mths, another says 0.5% per year and around 3%, which would give me more money) Also note widows pension does not reduce, even if you take a smaller sum to get max lump sum for any of the pensions. Sending it off on Sat to await, final quotes incl DBCBS.(I was out in the first place with the lump sums, but happy to be so, I hope.