Flexiplan and Bonus Plan Transfer

Hawkey99 · Post by **Hawkey99** » 30 Aug 2020, 14:43

Hi Robert,

In a previous post you mentioned you could transfer one of these into a new scheme and draw down.

Why is it you cannot do transfer both schemes.

I assume normally it would pay to transfer the Flexiplan which is generally more valuable

Thanks

Post by **RobertT** » 30 Aug 2020, 15:14

You can transfer both if you want to, although if you've already used one or both to fund the tax free lump sum when taking your main NRA60/65 benefits, it may be classed as crystallised funds and therefore you may not be able to. You might have to contact the PSC to clarify that one, unless someone on here can confirm?

Personally I plan to transfer my Bonusplan to bolster my personal pension for drawdown, with Flexiplan being used to fund my tax free lump sum when taking my NRA60/65 benefits.

It will all depend on circumstances, value, aims, etc.

Hawkey99 · Post by **Hawkey99** » 30 Aug 2020, 21:25

I used a part of my Flexiplan to fun my NRA 60 lump sum but am stilling paying into my Flexiplan and Bonus plan.

I assume none of the remainder of this is crystallised ?

Post by **RobertT** » 31 Aug 2020, 05:49

You might find your Flexiplan is crystallised, but your Bonusplan isn't. To be honest I'm not 100% sure, but the PSC will hopefully confirm.

You will still be able to use your remaining AVC's, to fund your tax free lump sum when taking your NRA65 benefits.. With any excess being paid out as a taxable lump sum or used for annuity purchase if over £1k, or commuted to more RM pension if under £1k.
There is no ability to transfer excess AVC cash for drawdown.

tonyboy29 · Post by **tonyboy29** » 31 Aug 2020, 11:58

Hi Robert,

I'm saving into the Flexiplan and was hoping I'd be able to use that to fund the drawdown of my pension in the future. If I can't transfer what remains in it to my main pension to take as flexable drawdown after I take my lump sum, can I take it gradually in order to stay within the yearly tax allowance for income? I only wan't to take around £4000 a year to stay with the income limit so could I take that amount from the Flexiplan account and then start my main pension drawdown when my flexiplan account is empty? I hope I'm not saving to end up having to take the remaining amount in one yearly payment as I'd lose 20% of my savings.

Post by **RobertT** » 31 Aug 2020, 13:21

tonyboy29 wrote:Hi Robert,

I'm saving into the Flexiplan and was hoping I'd be able to use that to fund the drawdown of my pension in the future. If I can't transfer what remains in it to my main pension to take as flexable drawdown after I take my lump sum, can I take it gradually in order to stay within the yearly tax allowance for income? I only wan't to take around £4000 a year to stay with the income limit so could I take that amount from the Flexiplan account and then start my main pension drawdown when my flexiplan account is empty? I hope I'm not saving to end up having to take the remaining amount in one yearly payment as I'd lose 20% of my savings.

My original plan was to take the 25% tax free lump sum from my AVC's and then transfer the excess to my personal pension for drawdown alongside my main NRA60 benefits. So for example my NRA60 might pay out £8k per year and I'd top that up by drawing down £4.5k from the personal pension. No tax would be payable, assuming current Personal Tax Allowance of £12,500 and no other income.
It sounds like that was your plan too?

However, there was somebody on these forums a few years ago who was going through the process of taking their pension and wanted and assumed they could do as I describe above. They were told transferring out excess AVC cash for drawdown was not allowed!

I contacted the pensions service centre myself and they confirmed it.
Any excess AVC cash(after you've taken the permitted 25% of pot value tax free) must be paid out as a taxable lump sum or used to purchase an annuity if over £1k, or commuted to more RM pension if under £1k.
There is no option to transfer to a personal pension for drawdown, or drawdown directly from RM AVC's.

But if you have excess AVC cash after taking your NRA60 benefits, you can defer it to take with your NRA65 benefits. But if there's still an excess after that it must be taken as above.

I therefore stopped paying into Flexiplan and diverted those payments into my personal pension instead. It means I don't benefit fully from the tax breaks when paying into RM pensions, but I won't be paying a shed load of tax on the way out either. It also effectively enables me to retire earlier!

I'm planning on using my personal pension to initially fund retirement before 60 and then to supplement my NRA60/65 up to the personal tax allowance, with the tax free lump sums on top. Between the ages of 55 and 67(state pension age) I should be able to withdraw most if not all of my personal pension cash tax free. Although i will still have AVC's worth more than 25% of my pot value and will still pay some tax on that.
i'm also planning on transferring my Bonusplan over to my personal pension, to reduce the mount of excess AVC cash aswell as topping up my drawdown fund.

So basically you can't do what you thought you could do I'm afraid!
The only other option being to transfer the whole balance of your Flexiplan to your personal pension independently of taking your main NRA60/65 benefits.

It's something I looked into but discounted as I'd actually end up paying more tax.
It's not possible to make part transfers either.

I hope that helps, despite probably not being the answer you wanted.

reedy · Post by **reedy** » 31 Aug 2020, 20:29

So Robert when you retire how many years service will you have? I will have 35 years at 55 with a 40k avc pot. Would that be a too large amount as i dont want to have to much in

Post by **RobertT** » 01 Sep 2020, 04:39

reedy wrote:So Robert when you retire how many years service will you have? I will have 35 years at 55 with a 40k avc pot. Would that be a too large amount as i dont want to have to much in

I'll have a similar length of service to you, although that doesn't necessarily correlate to a similar amount of RM pension.
I don't plan to take any of my RM pension,(or AVC's) until their NRA's.

You can take 25% of your total pot value as tax free cash, which is worked out as:

pension x 20 + standard lump sum(sections A/B) + DBCBS + AVC's

See page 12 of the plan guide for more info: https://www.royalmailpensionplan.co.uk/ ... ages_0.pdf" onclick="window.open(this.href);return false;

Hawkey99 · Post by **Hawkey99** » 01 Sep 2020, 20:04

Replies received today from PSC......

Your options are as follows:

Flexiplan:
Take your remaining AVC funds with the NRA65 pension benefits (depending on HMRC limits)
Transfer out your AVCs. (this can be done from anytime but is advisable to cease contributions before requesting this to avoid leaving a residual fund invested)
Purchase an annuity (25% tax-free option given to the member)
Continue AVC being deferred. (leave it invested until a later date after taking your NRA65 pension)

Bonusplan:
Take your remaining AVC funds with his NRA65 pension benefits.

The funds that were in place when you took your NRA60 benefits and not utilised haven’t been crystallised they just add to the amount available when you do decide to take them.

Hope this help everyone....Interestingly not many options with Bonusplan ??

Post by **RobertT** » 02 Sep 2020, 10:34

Hawkey99 wrote:Replies received today from PSC......

Your options are as follows:

Flexiplan:
Take your remaining AVC funds with the NRA65 pension benefits (depending on HMRC limits)
Transfer out your AVCs. (this can be done from anytime but is advisable to cease contributions before requesting this to avoid leaving a residual fund invested)
Purchase an annuity (25% tax-free option given to the member)
Continue AVC being deferred. (leave it invested until a later date after taking your NRA65 pension)

Bonusplan:
Take your remaining AVC funds with his NRA65 pension benefits.

The funds that were in place when you took your NRA60 benefits and not utilised haven’t been crystallised they just add to the amount available when you do decide to take them.

Hope this help everyone....Interestingly not many options with Bonusplan ??

I would argue that based on other peoples experiences and my written reply when I asked the question, that once you've used your AVC's to fund the tax free lump sum, transferring out any excess isn't an option. But taking it as taxable cash is!

Transferring out AVC's is possible if the funds haven't been used to fund the tax free lump sum. That transfer can be done either before or after you take your NRA60/65 benefits.

So have the rules changed recently, or are the PSC giving out mixed messages?

Plus, these options are of course applicable to those who have already taken their NRA60 benefits, but not their NRA65.
So the options for those you haven't taken any benefits are going to be slightly different.

Hawkey99 · Post by **Hawkey99** » 06 Sep 2020, 09:23

Its very strange and worrying that such a massive event for many of us and confused by different answers from PSC.

I will again email them to confirm this information.....

To be honest When you take your NRA 65 I can't see why you wouldn't be able to use the remainder of your AVC to fund a new drawdown pension (after taking your NRA 60).

If this money is uncrystallised it would make sense....But who knows ???

Post by **RobertT** » 06 Sep 2020, 10:55

I would agree that we really should be able to transfer out excess AVC cash to a personal pension for drawdown, but the scheme doesn't allow it. It's either an annuity or taxable cash.
Examples from people on this forum and a written reply to me a few years ago seem to confirm that.

But the fact they give out conflicting information is very worrying!

I've contacted them about the possibility of transferring out my Bonusplan separately from taking my main RMPP benefits and have received two different answers regarding whether I have to carry on paying into Bonusplan for the duration of my service.

One reply(from a customer service advisor) said I had to carry on paying in until I leave RM, which does tally with the info in the AVC guide. But another reply(from the head of pensions & severance) said I could stop paying in, but I would also have to terminate my active membership of the RMPP.

I would have thought it was a fairly basic thing, just like the ability to drawdown excess AVC's, it's either a yes or a no. Not a yes from one person and a no from another.

Capita get a bad press on these forums, but the PSC aren't really doing themselves any favours either!

reedy · Post by **reedy** » 06 Sep 2020, 10:57

You cant stop bonus plan. Once your in it your commited untill you leave RM. Thats what i read somewhere

Post by **RobertT** » 06 Sep 2020, 11:01

reedy wrote:You cant stop bonus plan. Once your in it your commited untill you leave RM. Thats what i read somewhere

Like i said above, I've had a reply from someone in authority at the PSC who said you can stop payments into Bonusplan!

Mixed messages!

reedy · Post by **reedy** » 06 Sep 2020, 11:37

Allthough the site is down this small qoute shows up on google " authorise PSC and Scottish Widows to carry out my instructions as shown above. I understand I cannot reduce or cease my Bonusplan ..."