RMDCP

Post by **ihatedogs** » 02 Sep 2020, 11:08

I'm 57 and currently in the RMDC pension. I pay in 10% as do RM.
I'm currently saving into a savings account at a pretty poor rate.
Is there any reason not to put these savings into the pension on a weekly basis? Would I still get the tax relief at 25%?
Being over 55 I can access the money anytime, but are there restrictions? i.e. can I take some of the money out or must I take it all at once, and if I make a withdrawal say in two years time, must I stop paying in or can I carry on in the fund?
Cheers

Post by **RobertT** » 02 Sep 2020, 11:57

You have to pay into the RMDCP via your wages, so you can't put your savings directly into it. But you can obviously do it indirectly.

Factoring in tax relief and salary sacrifice(PSE), each £1 gross contribution(the amount on your payslip) will only cost you £0.68, giving you an instant 47% uplift on your money. The government pays the rest!

Full info can be found in the plan guide available here, along with lots of other info.
And here's some general DC pension info.

bucks123 · Post by **bucks123** » 02 Sep 2020, 18:53

It's a great option if you can afford it and make sure you stay within the PSE minimum wage guidelines.

As Robert says, it's an immediate 47% return on your money

I am doing the same thing to try and turbo charge my Royal Mail DC pot value.

Post by **ihatedogs** » 02 Sep 2020, 20:27

Thanks Robert, the links were very helpful. Had a read of them, did the maths and, as both you and buck123 say, it's basically free money from the taxman.
I rang Scottish widows who confirmed that I can raise and lower my contributions as I please so it's a definite go for me.
Cheers.

Janet Brum · Post by **Janet Brum** » 02 Sep 2020, 21:47

bucks123 wrote:It's a great option if you can afford it and make sure you stay within the PSE minimum wage guidelines.

As Robert says, it's an immediate 47% return on your money I am doing the same thing to try and turbo charge my Royal Mail DC pot value.

Do you or Robert know what percentage is under the PSE minimum wage guidelines?

Instead of 10%, how much can one pay into pension? 15%? 20%? more?

bucks123 · Post by **bucks123** » 03 Sep 2020, 08:40

Janet, some info on the PSE calculation can be found on this thread (see Heapsy's response to the question put by the OP)

https://www.royalmailchat.co.uk/communi ... alculation

Janet Brum · Post by **Janet Brum** » 03 Sep 2020, 09:48

bucks123 wrote:Janet, some info on the PSE calculation can be found on this thread (see Heapsy's response to the question put by the OP)

https://www.royalmailchat.co.uk/communi ... alculation

Thank you, if I`m reading heapsy`s post right, I can pay another 10% without issues :)

heapsy wrote:Your hourly rate of pay, AFTER your AVC deductions must NOT fall below the National Minimum Wage rate. I'm not sure how much that is, so you would have to check online. I'm on 38 hours. I have recently increased my contributions by £2 per week. I pay £2.88 fixed payment into Bonus plan. Plus another £118 paid into Flexi plan, this is spread across 3 different funds. So a total of £120.88 per week. I have remained within PSE, so pay reduced N.I. contributions. With that in mind, a rough calculation tells me you could pay £95 per week, and stay within PSE. That should give a little breathing space between what you pay, and the absolute maximum you can pay. You cannot include shift allowances to calculate your payments, as these are not part of your HOURLY rate as such. I hope that helps, I did fall out of PSE for a few random weeks, as was paying too much, and my hourly take home pay dropped below the National Minimum Wage. Another advantage to AVCs is that your take home pay will increase, as you tax liability is lower.

regalia25 · Post by **regalia25** » 03 Sep 2020, 11:18

For your info I pay a total of 23% (6 plus additional 17) without dropping out of PSE. Anyone pay a higher percentage within limits ?

Post by **ihatedogs** » 03 Sep 2020, 13:31

regalia25 wrote:For your info I pay a total of 23% (6 plus additional 17) without dropping out of PSE. Anyone pay a higher percentage within limits ?

I'm upping mine to 30%, that'll take me down to £370 for a 39 hr week so £9.48 p/hr.
NMW is currently £8.72.
If anyone's considering this it's worth noting that the payment calculations are taken from a flat wage and don't include shift allowances.

silver_fox · Post by **silver_fox** » 20 Sep 2020, 09:09

How do you calculate the maximum?
My last payslip 38 hours, £441.58 pens contrib pay.
£26.49 my 6% contribution
£44.15 RM 10%

Post by **RobertT** » 20 Sep 2020, 09:31

silver_fox wrote:How do you calculate the maximum?
My last payslip 38 hours, £441.58 pens contrib pay.
£26.49 my 6% contribution
£44.15 RM 10%

You can't let your pay reduce to less than the minimum wage. So a simple calculation is work out the max extra amount you can pay would be to subtract the minimum wage from basic RM wage and multiply by number of basic hours worked:

11.62 – 8.72 x 38 = 110

So an extra payment of £110 per week would be the maximum amount you can save each week, although I would advise about £100 to be on the safe side.

There are people on this forum who do pay roughly those amounts and they might be along in due course to give you their experience?

silver_fox · Post by **silver_fox** » 20 Sep 2020, 10:59

Thanks Robert, and anyone else who posts with their figures.
I would definitely like to increase my contribution, my only concern is which fund/funds to invest in.
I have an older pension fund which I have changed from a managed fund to a vanguard index tracking fund ( global, low fees).
Has anyone explored this and found a better fund selection rather than the default blended equity? Or do you see the fund choice as less important than the amount you pay in?

Post by **RobertT** » 20 Sep 2020, 11:16

Things to consider are:

Contribution levels.
Your age in relation to your planned retirement age.
Your attitude to risk.
Charges.

There is no one size fits all.
Just because a particular fund has been good for one person doesn't necessarily mean it'll be good for someone else, due to the above variables and timing.

But if you go with your own choices rather than the default lifecycle option, be prepared to invest in more than one fund for diversity and regularly re-evaluate your investments to ensure they continue to match your aims.

silver_fox · Post by **silver_fox** » 20 Sep 2020, 18:04

Thanks Robert, out of interest which funds do you invest in? I've still got 20+ years to retirement so happy with risk.

Hawkey99 · Post by **Hawkey99** » 20 Sep 2020, 19:14

Hi Silverfox,

Global equity funds are a great way to invest. Basically think invest in every major stock market in the world. Over the last 100 years this has always proved successful over the long term.

Outside of RM Vanguard are one of the best and they do an ISA and SIPP and the charges are crazily low....Something like 0.3% off top of my head could be lower.

People say don't invest in the stock market but think about everything you come into contact with in the first 5 mins of your day and they will almost certain to be listed in the stock market....Bed, phone, Soap, toothpaste ,soap, water, kettle, cerial, electricity, clothes....and it goes on and on.

Nearly all of your pay is paid into stock market companies so its bonkers not to be invested in them.....