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

[vmaxv4]

Clears things up nicely.
Thanks again Robert

[stephen500]

Thanks Robert
It has been established by the figures that @Stephen500 has supplied that taking the DBCBS early that it has only been reduced by a smaller than thought amount.
My question is based on the premise above If/what benefit would it be to take my NRA65 before the CDC scheme is in motion.
I’m already in receipt of my NRA60 and appalled at the thought of my benefits being further reduced (67) as I plan to retire at 65 on 05/04/2025 (COPA Free).

There would be no benefit in specifically taking your NRA65 benefits before CDC comes in, because CDC will be completely separate from the current RMPP.

Benefits in NRA60, NRA65 and DBCBS will not be affected by the introduction of CDC!

The NRA of 67 will only apply to the pension you accrue in the CDC scheme, so you'll have the choice of taking that early but with a reduction, or waiting until 67 with no reduction.

We don't yet know how much that reduction is likely to be, but 5% per year is probably as good a guess as any.

As the DBLSS will be very similar to the DBCBS, I assume that any early payment reduction for that will also be similar, ie smaller than 5% per year.

The only thing I would add to this Robert T, is that it appears to me (without knowing any bonuses that may have been added to the DBCBS) that my reduction of 8% for taking it 5 years (well 5 years and 2 months early) appears to work out at about 1.6% per year. It's hard to be certain, as we have never been told about bonuses (which if added would increase the reduction rate) added to the DBCBS for 2018 or yet 2019?

[RobertT]

The only thing I would add to this Robert T, is that it appears to me (without knowing any bonuses that may have been added to the DBCBS) that my reduction of 8% for taking it 5 years (well 5 years and 2 months early) appears to work out at about 1.6% per year. It's hard to be certain, as we have never been told about bonuses (which if added would increase the reduction rate) added to the DBCBS for 2018 or yet 2019?

I posted on 19th April that the increase for the first year(2018/19) of the DBCBS was 3.7%, here's the thread: https://www.royalmailchat.co.uk/communi ... 27&t=95564" onclick="window.open(this.href);return false;. Every member of the RMPP should have had a copy of 'pension news' delivered to their home address confirming it, which is also available to view in the library section of the RMPP website.

I also mentioned it on 25th July on page 5 of this very thread!!!

[nataddick]

The interesting point here about the bonus is whether there is an interim payment if, as most people will, take their DBCBS sometime between annual declarations. I took my NRA 65 benefits in July this year, so do I get a proportionate payment from April to July? Imagine retiring 11.5 months after last declaration !

[RobertT]

The interesting point here about the bonus is whether there is an interim payment if, as most people will, take their DBCBS sometime between annual declarations. I took my NRA 65 benefits in July this year, so do I get a proportionate payment from April to July? Imagine retiring 11.5 months after last declaration !

As far as I'm aware the answer to that is no, you don't get a pro rata amount of annual bonus if you've taken your NRA65 & DBCBS part of the way through a pension year. Although if you leave RM with a deferred/preserved pension, then I assume you would.

As bonuses are added on 1st April and 1 year in arrears, you could have the scenario of someone taking their DBCBS on 31st March 2021 for example, paying into the scheme for 3 years and only getting a bonus on the first years contributions.

[stephen500]

The interesting point here about the bonus is whether there is an interim payment if, as most people will, take their DBCBS sometime between annual declarations. I took my NRA 65 benefits in July this year, so do I get a proportionate payment from April to July? Imagine retiring 11.5 months after last declaration !

As far as I'm aware the answer to that is no, you don't get a pro rata amount of annual bonus if you've taken your NRA65 & DBCBS part of the way through a pension year. Although if you leave RM with a deferred/preserved pension, then I assume you would.

As bonuses are added on 1st April and 1 year in arrears, you could have the scenario of someone taking their DBCBS on 31st March 2021 for example, paying into the scheme for 3 years and only getting a bonus on the first years contributions.

What is the bonus for 2019 as I should be entitled to that leaving in 2020. I have now one for 2018, but as I said what about 2019?

[RobertT]

The interesting point here about the bonus is whether there is an interim payment if, as most people will, take their DBCBS sometime between annual declarations. I took my NRA 65 benefits in July this year, so do I get a proportionate payment from April to July? Imagine retiring 11.5 months after last declaration !

As far as I'm aware the answer to that is no, you don't get a pro rata amount of annual bonus if you've taken your NRA65 & DBCBS part of the way through a pension year. Although if you leave RM with a deferred/preserved pension, then I assume you would.

As bonuses are added on 1st April and 1 year in arrears, you could have the scenario of someone taking their DBCBS on 31st March 2021 for example, paying into the scheme for 3 years and only getting a bonus on the first years contributions.

What is the bonus for 2019 as I should be entitled to that leaving in 2020. I have now one for 2018, but as I said what about 2019?

As I said in my previous post, the bonuses are awarded 1 year in arrears!

On 1st April 2020 we got a 3.7% bonus for the first year of DBCBS – 2018/19.
On 1st April 2021 we'll hopefully get a bonus for years 2018/19 and 2019/20.
And so on.....

As far as I'm aware, if you've taken all of your benefits and therefore your DBCBS pot is worth £0, you won't get anything when they're awarding the bonuses each 1st April.

You could argue that you should get a pro rata amount for part years either when taking your benefits or the following April, and it's a reasonable argument to make. But as far as I know, you don't.

So in your case as you're planning on taking all your benefits before 1st April 2021, you won't get any more bonuses!

[stephen500]

The interesting point here about the bonus is whether there is an interim payment if, as most people will, take their DBCBS sometime between annual declarations. I took my NRA 65 benefits in July this year, so do I get a proportionate payment from April to July? Imagine retiring 11.5 months after last declaration !

As far as I'm aware the answer to that is no, you don't get a pro rata amount of annual bonus if you've taken your NRA65 & DBCBS part of the way through a pension year. Although if you leave RM with a deferred/preserved pension, then I assume you would.

As bonuses are added on 1st April and 1 year in arrears, you could have the scenario of someone taking their DBCBS on 31st March 2021 for example, paying into the scheme for 3 years and only getting a bonus on the first years contributions.

What is the bonus for 2019 as I should be entitled to that leaving in 2020. I have now one for 2018, but as I said what about 2019?

As I said in my previous post, the bonuses are awarded 1 year in arrears!

On 1st April 2020 we got a 3.7% bonus for the first year of DBCBS – 2018/19.
On 1st April 2021 we'll hopefully get a bonus for years 2018/19 and 2019/20.
And so on.....

As far as I'm aware, if you've taken all of your benefits and therefore your DBCBS pot is worth £0, you won't get anything when they're awarding the bonuses each 1st April.

You could argue that you should get a pro rata amount for part years either when taking your benefits or the following April, and it's a reasonable argument to make. But as far as I know, you don't.

So in your case as you're planning on taking all your benefits before 1st April 2021, you won't get any more bonuses!

Or perhaps I might end up with a small lump sum payment, with my regular pension payment, I will let you know.

[nataddick]

I have a simple spreadsheet that calculates my own and RM’s contributions (totalling 19.6% of pensionable contributory pay) since inception plus the 3.7% bonus uplift when it fell due and I have been paid £80.02 more than my own calculations projected so something is not quite right. Not than I am complaining as it is my favour !

I have still not had my excess AVC payment and ‘final pay’ calculations but I am intrigued to know how DBCBS works in practice.

As Robert mentions,I would certainly argue that to pay my own pension contribution of 6%, let alone the 13.6% from RM for a zero return, unless my actual retirement date coincides with that of the bonus declaration is unacceptable and really needs further investigation. I will raise this with PSC as an ‘enquiry’ once I have my own final NRA 65 details to hand.

[stephen500]

The interesting point here about the bonus is whether there is an interim payment if, as most people will, take their DBCBS sometime between annual declarations. I took my NRA 65 benefits in July this year, so do I get a proportionate payment from April to July? Imagine retiring 11.5 months after last declaration !

I am told that I will get my excess DBCBS within 12 weeks of taking my pension in Nov, after the revision process, which can take up to 12 weeks.
I presume if you took your NRA65 in July, that you should have any excess DBCBS by early November at the latest from RMPP.

[nataddick]

Thanks Stephen - I got my DBCBS fund paid in full, the Excess arises from unintentionally overfunding my Bonusplan and Flexiplans AVC’s due to the introduction of the DBCBS. I am 9 weeks into the 12 week revision process so around 3 weeks to wait!

[freespeech]

Thanks Stephen - I got my DBCBS fund paid in full, the Excess arises from unintentionally overfunding my Bonusplan and Flexiplans AVC’s due to the introduction of the DBCBS. I am 9 weeks into the 12 week revision process so around 3 weeks to wait!

I'm thinking of increasing my AVC's......what do you mean by "unintentionally overfunding my Bonusplan and Flexiplan AVC's"?

[stephen500]

Thanks Stephen - I got my DBCBS fund paid in full, the Excess arises from unintentionally overfunding my Bonusplan and Flexiplans AVC’s due to the introduction of the DBCBS. I am 9 weeks into the 12 week revision process so around 3 weeks to wait!

I can't remember, but where you deffered or had you left the business at the same time as taking your pension.
So my excess is the DBCBS that was over and above the DBCBS that could be used for my 25% tax free lump sum (combined with my standard lump sum of NRA 65)
I have to pay tax on 75% of this UCLS and 25% of it is tax free.
But they won't pay it with the rest of the lump sums and it is subject to the revisions process of 12 weeks, so they can check my pay information is correct and I presume make sure I have paid the correct tax. I think I will pay £1170 on £7800 excess (of which 75% is taxable)
Avcs seem to create time lag problems, whether that is your delay, perhaps mine will be quicker?
Let us know when you have them.

revisions excess blacked out.jpg

[RobertT]

Thanks Stephen - I got my DBCBS fund paid in full, the Excess arises from unintentionally overfunding my Bonusplan and Flexiplans AVC’s due to the introduction of the DBCBS. I am 9 weeks into the 12 week revision process so around 3 weeks to wait!

I'm thinking of increasing my AVC's......what do you mean by "unintentionally overfunding my Bonusplan and Flexiplan AVC's"?

The value of his DBCBS fund, Flexiplan and Bonusplan combined is over 25% of his NRA65 pot value.
That overfunding was due to the DBCBS being introduced.

Both the DBCBS and AVC's fund the tax free lump sum when taking your pension benefits.

Sorry for answering someone else's question.

[nataddick]

Spot on Robert!