Pension - confused.

[norris9]

Thanks for this and thanks to everyone else who posted. I will keep my pension and keep on paying 6%.

2 other things:

- I have many sheets in front of me that I got through the post explaining about the pension, what's confusing me is that Zurich and Scottish Widows are mentioned, who does what?

The RMDCP used to be administered by Zurich, but Scottish widows took over around 12 months ago if I remember correctly.

- How do I select an investment to put this pension money into and if you choose to put it in investments does all of it have to go there or can you choose a % of it to be put into one. I have a sheet with a long list of options....Active Global Equity, Diversified Assets, etc etc.... Do I just also use the link provided above to Scottish Widows /RoyalMail plan?

Nobody can really tell you which funds to invest in, because that's a personal choice based on age, attitude to risk, etc. This will tell you the basics of what to consider: https://www.moneyadviceservice.org.uk/e ... n-overview" onclick="window.open(this.href);return false; and there is more info on the SW RMDCP site I linked to in my first post. Plus I'm sure a bit of Googling will help too.

You can invest in as many of the funds as you like, in fact spreading the risk and not putting all your eggs in one basket is a good thing.

You can find out more info on the funds available here: https://digital.feprecisionplus.com/cor ... ory=6rmd79" onclick="window.open(this.href);return false;

My advice would be to take your time, do your homework and make an informed decision.

Just had to fill out an online form to get hold of my login details as none of these bleeding forms have what I need on them so can't get onto my account. I am hoping it's a nice easy account to use where I can switch my age of taking the pension from 65 to 55 and easily select an investment to plonk the pension into. I hope I don't have to phone up to do this kind of stuff.

As far as I know you can chose and change funds online, although someone might be along in due course and say no you can't. But you can go the paper route, see here for the form: https://rmdcp.uk/help-how-to/useful-documents-1" onclick="window.open(this.href);return false;

Thank you.

[TheStrangler]

I'm similar!
When I joined RM as a teenager the deduction on our payslip was called superannuation and I thought it was some kind of tax. So it was a while before I realised I was even in the pension and didn't really take any notice until my mid 20's.

That was when I took an interest in personal finance in general and pensions in particular and when I decided I wanted to retire reasonably early, with 60 being the absolute latest. I realised the RM pension on it's own probably wouldn't be enough, and started to pay AVC's.
At the time the RM pension was still a final salary scheme with an NRA of 60, but I predicted there would be changes along the way and a reduction in benefits, which has proved to be the case!

Every annual statement since has confirmed what I thought in my 20's was correct!

I started with Bonusplan, which with such small contributions was never going to be enough to make a big difference on it's own, and then Flexiplan, which I increased the contributions to most years in line with pay rises, with the addition of lump sums at the end of each tax year.
I started a personal pension along the way to enable me to diversify my investments and give me flexibility, and that came into it's own when pension freedoms were introduced and the ability to drawdown the money instead of having to buy an annuity.

The house was bought and paid for in my late 20's, which was the result of learning from 2 siblings who both got into trouble with their mortgages and money in general. I saved hard to do that and then I had money left over for the AVC's.

Saving might be seen as boring to some, but it's put me in the position of being financially secure and having a substantial pot of money(in various places) to enable me to retire early and on an income similar to my current full time RM wages. As long as I don't do anything stupid, I shouldn't have to worry about money again.

Best thing I've ever done – just need to see out the next 3 years at RM to take me up to 55, and then I'm gone.

Surprised you plan to go at 55 as you generally seem to be of the opinion that taking your pension early isn't a good idea!
Having said that, having paid your mortgage off in your 20s is some achievement and enabled you to invest wisely so fair play to you!

[RobertT]

I'm similar!
When I joined RM as a teenager the deduction on our payslip was called superannuation and I thought it was some kind of tax. So it was a while before I realised I was even in the pension and didn't really take any notice until my mid 20's.

That was when I took an interest in personal finance in general and pensions in particular and when I decided I wanted to retire reasonably early, with 60 being the absolute latest. I realised the RM pension on it's own probably wouldn't be enough, and started to pay AVC's.
At the time the RM pension was still a final salary scheme with an NRA of 60, but I predicted there would be changes along the way and a reduction in benefits, which has proved to be the case!

Every annual statement since has confirmed what I thought in my 20's was correct!

I started with Bonusplan, which with such small contributions was never going to be enough to make a big difference on it's own, and then Flexiplan, which I increased the contributions to most years in line with pay rises, with the addition of lump sums at the end of each tax year.
I started a personal pension along the way to enable me to diversify my investments and give me flexibility, and that came into it's own when pension freedoms were introduced and the ability to drawdown the money instead of having to buy an annuity.

The house was bought and paid for in my late 20's, which was the result of learning from 2 siblings who both got into trouble with their mortgages and money in general. I saved hard to do that and then I had money left over for the AVC's.

Saving might be seen as boring to some, but it's put me in the position of being financially secure and having a substantial pot of money(in various places) to enable me to retire early and on an income similar to my current full time RM wages. As long as I don't do anything stupid, I shouldn't have to worry about money again.

Best thing I've ever done – just need to see out the next 3 years at RM to take me up to 55, and then I'm gone.

Surprised you plan to go at 55 as you generally seem to be of the opinion that taking your pension early isn't a good idea!
Having said that, having paid your mortgage off in your 20s is some achievement and enabled you to invest wisely so fair play to you!

I have no intention of touching any of my RM pension before NRA.

When the pension freedoms were introduced in 2015 and the ability to drawdown personal pensions became a reality, I saw that as an opportunity to ramp up the savings into mine to enable early retirement. Which was a fairly easy decision as I'd already built up 25% of total pot value in AVC's by then.

I bought my house in the mid 90's right at the bottom of a property slump when prices were very low compared to now. Had I spent 25 years paying it off, I'd be paying my last instalment at the end of this year and shelled out at least £30k more in interest.
That money has gone into pensions with the addition of tax relief and investment growth and helped massively.

Some people are spenders and some are savers, and it's fair to say I'm the latter!

[NorthernBoy]

Best thing I've ever done – just need to see out the next 3 years at RM to take me up to 55, and then I'm gone

Rob, can’t blame you for retiring at 55 if you can make the numbers work. The world of world is generally pretty crap these days and only gets worse,

I am aiming to go some time between 55 and 60, just trying to put as much aside as possible. I worked out with the favourable tax breaks for retirees you can draw nearly £1400 a month tax free from a DC pot. (assuming no other income) In wage terms that’s like having a 20k wage.

[RobertT]

Best thing I've ever done – just need to see out the next 3 years at RM to take me up to 55, and then I'm gone

Rob, can’t blame you for retiring at 55 if you can make the numbers work. The world of world is generally pretty crap these days and only gets worse,

I am aiming to go some time between 55 and 60, just trying to put as much aside as possible. I worked out with the favourable tax breaks for retirees you can draw nearly £1400 a month tax free from a DC pot. (assuming no other income) In wage terms that’s like having a 20k wage.

Yes, that's pretty much what I plan to do.
Based on what I've already got and how much I'm currently saving, I should have enough at 55 to provide myself with a decent income from the personal pension until I'm 60. With some left to supplement my RM pension from then to SPA, and stay within the personal tax allowance.
Although I'll probably take the tax free cash upfront and drawdown the rest, rather than the UFPLS route you seem to be describing.

I haven't ruled out getting myself a little part time job(might be easier said than done with the effects of Covid) to fill some time and make the finances a bit easier, but the aim is that I won't need to.
The RM pension and AVC's will kick in at 60 and 65, providing guaranteed income and additional cash.

The world of work is very different now, and isn't going to get better any time soon.
There are plenty of people who'll have no choice but to work well into their 60's and even into their 70's, and if I hadn't done anything about it, the earliest I could retire completely would be 65.
I wanted to give myself the ability and flexibility to go sooner!

[freespeech]

Best thing I've ever done – just need to see out the next 3 years at RM to take me up to 55, and then I'm gone

Rob, can’t blame you for retiring at 55 if you can make the numbers work. The world of world is generally pretty crap these days and only gets worse,

I am aiming to go some time between 55 and 60, just trying to put as much aside as possible. I worked out with the favourable tax breaks for retirees you can draw nearly £1400 a month tax free from a DC pot. (assuming no other income) In wage terms that’s like having a 20k wage.

Yes, that's pretty much what I plan to do.
Based on what I've already got and how much I'm currently saving, I should have enough at 55 to provide myself with a decent income from the personal pension until I'm 60. With some left to supplement my RM pension from then to SPA, and stay within the personal tax allowance.
Although I'll probably take the tax free cash upfront and drawdown the rest, rather than the UFPLS route you seem to be describing.

I haven't ruled out getting myself a little part time job(might be easier said than done with the effects of Covid) to fill some time and make the finances a bit easier, but the aim is that I won't need to.
The RM pension and AVC's will kick in at 60 and 65, providing guaranteed income and additional cash.

Fair play to you....although going at 55 the thing you will lose are the 5 years of pay rises to NRA60 which can be critical to the final salary element.

The world of work is very different now, and isn't going to get better any time soon.
There are plenty of people who'll have no choice but to work well into their 60's and even into their 70's, and if I hadn't done anything about it, the earliest I could retire completely would be 65.
I wanted to give myself the ability and flexibility to go sooner!

[RobertT]

Best thing I've ever done – just need to see out the next 3 years at RM to take me up to 55, and then I'm gone

Rob, can’t blame you for retiring at 55 if you can make the numbers work. The world of world is generally pretty crap these days and only gets worse,

I am aiming to go some time between 55 and 60, just trying to put as much aside as possible. I worked out with the favourable tax breaks for retirees you can draw nearly £1400 a month tax free from a DC pot. (assuming no other income) In wage terms that’s like having a 20k wage.

Yes, that's pretty much what I plan to do.
Based on what I've already got and how much I'm currently saving, I should have enough at 55 to provide myself with a decent income from the personal pension until I'm 60. With some left to supplement my RM pension from then to SPA, and stay within the personal tax allowance.
Although I'll probably take the tax free cash upfront and drawdown the rest, rather than the UFPLS route you seem to be describing.

I haven't ruled out getting myself a little part time job(might be easier said than done with the effects of Covid) to fill some time and make the finances a bit easier, but the aim is that I won't need to.
The RM pension and AVC's will kick in at 60 and 65, providing guaranteed income and additional cash.

Fair play to you....although going at 55 the thing you will lose are the 5 years of pay rises to NRA60 which can be critical to the final salary element.

The world of work is very different now, and isn't going to get better any time soon.
There are plenty of people who'll have no choice but to work well into their 60's and even into their 70's, and if I hadn't done anything about it, the earliest I could retire completely would be 65.
I wanted to give myself the ability and flexibility to go sooner!

The final salary pension doesn't increase in line with wages anymore for employees and hasn't since 2014. It increases with RPI up to a maximum of 5%.

As a deferred member I will receive CPI increases rather than RPI, which is something I'm prepared to take to go at 55.

When CDC starts I assume all RMPP members will be deferred anyway?

Money's important, but so is time and freedom!

[freespeech]

[/quote]
The final salary pension doesn't increase in line with wages anymore for employees and hasn't since 2014. It increases with RPI up to a maximum of 5%.

As a deferred member I will receive CPI increases rather than RPI, which is something I'm prepared to take to go at 55.

When CDC starts I assume all RMPP members will be deferred anyway?

Money's important, but so is time and freedom![/quote]

The final salary element DOES increase with pay on the proviso that (a) you are still employed by RM, and (b) you are in the same "pay band family" as your role in 2014. This has been very important to me as most of my pension will be based on my pensionable pay service so I intend to stay in the same grade for the few remaining years I have.

[norris9]

Say I left Royal Mail in a years time. Would that have any negative effect on my pension other than I obviously wouldn't be getting it anymore?

Is it just a simple case of getting what I've put in when I am old and wrinkled. Which as it stands is around £300 and whatever RM have put in, which is more than double what i've put in.

[RobertT]

The final salary element DOES increase with pay on the proviso that (a) you are still employed by RM, and (b) you are in the same "pay band family" as your role in 2014. This has been very important to me as most of my pension will be based on my pensionable pay service so I intend to stay in the same grade for the few remaining years I have.

Increases in pensionable pay were de-linked from pay rises in 2014 and will therefore go up by RPI, unless you had a promotional pay award within the same pay grade grouping, or if you move to a higher pay grade grouping.

So for most people, pension contributions and pensionable pay, will increase each April regardless of whether we get a pay rise. It's usually mentioned on our pay slips.

The full info is available here: https://www.myroyalmail.com/2014%20RM%20Pension%20Plan" onclick="window.open(this.href);return false;

There was also a fairly recent LTB on the subject: https://www.royalmailchat.co.uk/communi ... 27&t=96187" onclick="window.open(this.href);return false;

[RobertT]

Say I left Royal Mail in a years time. Would that have any negative effect on my pension other than I obviously wouldn't be getting it anymore?

Is it just a simple case of getting what I've put in when I am old and wrinkled. Which as it stands is around £300 and whatever RM have put in, which is more than double what i've put in.

Your pension is basically just a pot of money – you, the government and RM all pay in. If you leave RM you can keep it in the RMDCP and it'll still be invested as you choose. Or you might be able to transfer it if your new employer allows transfers in(most do, some might not).

The earliest you can currently touch your pension cash is age 55, although that age is expected to increase over time. You will have different options, as this link will tell you: https://www.moneyadviceservice.org.uk/e ... on-schemes" onclick="window.open(this.href);return false;

You've been paying in for 4 months and assuming you're contribution is 6% and RM's is 10%, about £800 has been contributed in total. Which factoring in tax relief and PSE has only cost you about £200. Just think how much will have gone in when you're old and wrinkled.
You'll also have investment growth on top, which can increase your pot significantly over time.

Although you also need to bear in mind that RM are planning to introduce a new pension scheme for all employees, called a Collective Defined Contribution scheme. It will replace all existing schemes, but as it's a completely new concept for UK pensions, legislation needs to be passed first, and we don't know when that will be.

There are threads about CDC on these forums, and these links will give more info:

https://www.myroyalmail.com/pensions" onclick="window.open(this.href);return false;
https://www.royalmailgroup.com/en/respo ... -pensions/" onclick="window.open(this.href);return false;