Pension Supplement

heapsy · Post by **heapsy** » 19 Jul 2020, 09:35

stodgy88 wrote:I ve been with royal mail 35 years ,but have been taking my pension for 9.5 years , planning on finishing around christmas aged 63 ,am i likely to receive the supplement thanks.

No. You are not a section C member so don't get a supplement.

Post by **stodgy88** » 19 Jul 2020, 12:49

cheers what years did the section c run from and to thanks. i was in pension from 1985 till 2010.

Post by **RobertT** » 19 Jul 2020, 13:02

Anyone who joined before 30 November 1971 will be in section A.
Joined from 1st December 1971 to 31st March 1987 is section B.
Joined from 1st April 1987 to 31st March 2008 is section C.

The scheme then closed to new entrants until 1st April 2018 and the creation of section F which is for those who've been in the RMDCP for at least 5 years and have chosen to join the DBCBS instead.

Post by **stodgy88** » 19 Jul 2020, 13:04

thanks RobertT again .

heapsy · Post by **heapsy** » 19 Jul 2020, 13:06

stodgy88 wrote:cheers what years did the section c run from and to thanks. i was in pension from 1985 till 2010.

Back in the 1980s there was a vote aimed at preserving the Final Salary pension. The result meant a new section called POPS or section C as it is now known was created. Section C members, the majority of the workforce in RM today, do not receive a lump sum. There is also a lower amount of pay which is pensionable, so a crap pension really. You would have voted back at that time on the new deal. It came in on 1st April 1987. Future employees got shafted.

Post by **stodgy88** » 19 Jul 2020, 13:48

thanks for explanation,appreciated.

Post by **RobertT** » 19 Jul 2020, 14:52

heapsy wrote:Back in the 1980s there was a vote aimed at preserving the Final Salary pension. The result meant a new section called POPS or section C as it is now known was created. Section C members, the majority of the workforce in RM today, do not receive a lump sum. There is also a lower amount of pay which is pensionable, so a crap pension really. You would have voted back at that time on the new deal. It came in on 1st April 1987. Future employees got shafted.

To be honest I don't know the exact circumstances of why section B was closed and replaced by section C, and as I wasn't employed by RM at the time, I've never really seen the point in finding out.

Many of those future employees will have been with RM in 2007 during the strikes that took place regarding pay, modernisation and pensions. With the pension issue going to a consultation and the subsequent closure of the final salary scheme to future accrual in 2008, and being replaced by the CSDB scheme for existing members and the RMDCP for new entrants.

I wonder how many posties who joined RM after April 2008 resent those in sections C for not fighting harder to keep the DB scheme open to them? I'm sure they would all rather be in section C than the RMDCP.

Section C members might still be in a majority, but their numbers are falling. If my office is anything to go by, the split between pension schemes/sections is approximately:

Section A: 0%*
Section B: 5%
Section C: 50-55%
RMDCP or section F: 40-45%

In practice some will effectively be in both schemes, as they will have taken all their sections A, B or C benefits and are currently paying into the RMDCP.

*The number of section A members currently working for RM has got to be very low, as they need to have 49+ years service. Although there are obviously still some, just none at my DO.

Post by **freespeech** » 31 Jul 2020, 13:32

heapsy wrote:
stodgy88 wrote:cheers what years did the section c run from and to thanks. i was in pension from 1985 till 2010.
Back in the 1980s there was a vote aimed at preserving the Final Salary pension. The result meant a new section called POPS or section C as it is now known was created. Section C members, the majority of the workforce in RM today, do not receive a lump sum. There is also a lower amount of pay which is pensionable, so a crap pension really. You would have voted back at that time on the new deal. It came in on 1st April 1987. Future employees got shafted.

.......although, for clarity, it may be useful to say that Section C doesn't have an automatic lump sum but you are able to draw up to 25% tax free with a consequential reduction in pension.

mark.cup · Post by **mark.cup** » 31 Jul 2020, 15:10

I often think maybe section c which I am in has the potential to be the better scheme. I know less pay is pensionable but if my memory serves me right each year in section c got you 1/60th as apposed to 1/80th + lump sum in section b.

But seeing as I've seen many section b members cash out at 55 and blow their lump sums on anything from a camper van to a 30k Florida holiday for their entire families then have a not very healthy monthly pension for a very long service.. I'm more than happy with a higher actual monthly living wage after retirement and building a nice big tax free lump sum via AVC's and salary sacrifice.

Not sure if I'm mad or if anyone else feels the same?

Post by **RobertT** » 31 Jul 2020, 17:19

This is a subject that comes up occasionally and I would say that overall there isn't much difference between sections B & C. Infact with everything else being equal, section C is probably slightly better, especially as the contribution rates(in money terms) are lower.

Based on many posts on these forums, it seems many people are fixated on the lump sum and feel the need to take as much cash as possible, which is obviously their choice.
But personally I've always seen the higher pension as more valuable over the longer term. Therefore I've used AVC's to fund he lump sum instead, and stand to get the best of both worlds – maximum section C pension(higher than section B) and maximum lump sum!

Obviously I've had to dip into my own pocket, but when you factor in the tax breaks, the extra employer contributions(via Bonusplan) and the investment growth, I've only put in around 40% of my current AVC's value.

Had I been in section B and saved the same amount, I'd either be commuting some of my standard lump sum to more pension at a very poor rate, or paying shed loads of tax on my AVC's, and possibly both.

Overall I'm glad to be in section C!

Post by **NorthernBoy** » 31 Jul 2020, 18:06

mark.cup wrote:I often think maybe section c which I am in has the potential to be the better scheme. I know less pay is pensionable but if my memory serves me right each year in section c got you 1/60th as apposed to 1/80th + lump sum in section b.

But seeing as I've seen many section b members cash out at 55 and blow their lump sums on anything from a camper van to a 30k Florida holiday for their entire families then have a not very healthy monthly pension for a very long service.. I'm more than happy with a higher actual monthly living wage after retirement and building a nice big tax free lump sum via AVC's and salary sacrifice.

Not sure if I'm mad or if anyone else feels the same?

Yes that’s a good point about the 2 different accrual rates. Back in the day people would say that section B was much better than C, but it’s not as clear cut as people once thought. To get 50% pension In C is 30 years as compared to 40 in B, but of course no lump sum.

Am I right in thinking that section C pensionable pay was lower and thats why we get a pension supplement?

Post by **RobertT** » 31 Jul 2020, 19:12

Section C pensionable pay was and still is lower because of the Lower Earnings Deduction, but the accrual rate was 1/60ths compared to 1/80ths with section B.

To be honest I'm not 100% sure why section C members get the supplement until state pension age. But looking at an old section C final salary plan guide I have from 2000, it was worked out as:

1/60th of the average LED in force over the period your pensionable pay is worked out, for each year of pensionable service. Up to a max of 40 years.

For example:
Pensionable service = 30 years 150 days
LED = £3,328

£3,328 / 60 x 30 years, 150 days = £1,687

Post by **fly-catchers** » 31 Jul 2020, 22:51

mark.cup wrote:I often think maybe section c which I am in has the potential to be the better scheme. I know less pay is pensionable but if my memory serves me right each year in section c got you 1/60th as apposed to 1/80th + lump sum in section b.

But seeing as I've seen many section b members cash out at 55 and blow their lump sums on anything from a camper van to a 30k Florida holiday for their entire families then have a not very healthy monthly pension for a very long service.. I'm more than happy with a higher actual monthly living wage after retirement and building a nice big tax free lump sum via AVC's and salary sacrifice.

Not sure if I'm mad or if anyone else feels the same?

I prefer my Section C as well. As you say the 1/60th even with the LED gives you a bigger pension. The bonusplan has added up to a nice lump sum. And for the moment the index linked increases in payment are linked to RPI not CPI. I am sure the link will change eventually to CPI or CPIH but not yet!

heapsy · Post by **heapsy** » 31 Jul 2020, 23:59

Am I right in thinking that section C is no longer linked to pay, unlike section B? If that is the case then how can it be better? Also, section B have the option to still pay AVCs which in effect allow them to build an even bigger pot without commutation.

Post by **RobertT** » 01 Aug 2020, 04:18

heapsy wrote:Am I right in thinking that section C is no longer linked to pay, unlike section B? If that is the case then how can it be better?

No. The 2014 changes applied to sections A, B and C!

Also, section B have the option to still pay AVCs which in effect allow them to build an even bigger pot without commutation.

Section B members can pay into Flexiplan, while C'ers can pay into Flexiplan and Bonusplan.

From your posts on this forum you're in section C and pay AVC's into both plans!