Pension pot

frankieboy · Post by **frankieboy** » 05 Oct 2020, 20:13

I have 10 more years before I retire and read a lot of posts on here, most go straight over my head. So on average how much do you need in your pension pot to give you say £100, £200 or whatever amount of weekly pension ?

Post by **RobertT** » 05 Oct 2020, 20:19

Are you in the RM Defined Contribution Plan administered by Scottish Widows(formerly Zurich)?

If so, you have different options with your pot of money, more info here: https://www.moneyadviceservice.org.uk/e ... on-schemes" onclick="window.open(this.href);return false;

If you want to go the annuity route, which will provide an income for the rest of your life, this will give you an idea of how much income your money will buy you at different ages: https://www.hl.co.uk/retirement/annuiti ... -buy-rates" onclick="window.open(this.href);return false;

If on the other hand your in section A, B or C of the RMSPS/RMPP, you'll have a defined benefit pension which is based on your wages and length of service.

frankieboy · Post by **frankieboy** » 05 Oct 2020, 21:38

RobertT wrote:Are you in the RM Defined Contribution Plan administered by Scottish Widows(formerly Zurich)?

If so, you have different options with your pot of money, more info here: https://www.moneyadviceservice.org.uk/e ... on-schemes" onclick="window.open(this.href);return false;

If you want to go the annuity route, which will provide an income for the rest of your life, this will give you an idea of how much income your money will buy you at different ages: https://www.hl.co.uk/retirement/annuiti ... -buy-rates" onclick="window.open(this.href);return false;

If on the other hand your in section A, B or C of the RMSPS/RMPP, you'll have a defined benefit pension which is based on your wages and length of service.

I joined Royal Mail in 2008 so not the old scheme, I did transfer a previous pension into the Royal Mail one ( right or wrong I don't know) most of the terminology used concerning pensions baffles me. I also have a local council pension mainly accumulated during the 1980's which I can take at 60 which will give me £12000 lump sum and £50 a week pension. Latest figures show I have £120000+ in my Royal Mail pension pot but really don't if it will be enough to see me alright in retirement.

Post by **RobertT** » 06 Oct 2020, 08:48

Nobody can really say whether it's enough or not because everyone's circumstances are different.

£120k would normally be regarded as a very healthy amount of money, and I'm not saying it isn't, but in pension terms it's not a fortune on it's own. Because if you want it to provide an income for life, at age 60 for example it would provide about £5,500-6,000 per year for a single life level income, or less if you want death benefits and/or inflationary increases.
That's not likely to be enough for most people unless you have income from another source.

You could choose drawdown instead, where you effectively use your pension savings as a bank account, and dip into it when you want(within certain rules). But there's the risk you could spend it too quickly and you'll run out, perhaps leaving just the state pension to live on.

Things to consider:

What age do you want to retire?
Is semi-retirement an option before a certain age?
What sort of lifestyle do you want in retirement?
What outgoings are you likely to have?
How much will your partner(if you have one) bring to the table?
Do you want an annuity or drawdown?
How much state pension will you get?

Also bear in mind that the current RM pension arrangements have only got a limited lifespan, due to the planned introduction of the CDC scheme at some point. That will replace all existing arrangements.

Schiff · Post by **Schiff** » 06 Oct 2020, 12:43

I agree with Robert T. Before you can decide whether your pension provision is enough you need to know what level of income you need in retirement for the lifestyle that you want to have.

I presume that you will have sufficient National Insurance contributions to get the full state pension of just over £175 per week. On top of this you have a pension of £50 per week from a former employer. Using drawdown you could probably safely draw around 3% or £3600 per year from your £120K pension pot with Royal Mail. After tax, in total you would be looking at around £285 per week. In addition, over the next 10 years you will also build up some pension entitlement from the new CDC pension scheme.

Is that going to be enough? Only you know how much you need or want.

Post by **NorthernBoy** » 06 Oct 2020, 17:42

Some really great advice for you so far.

The key is to work out what your retirement number is and work backwards from there. Do you need 15k, 20k, 25k a year etc?

Once you know your number, subtract your guaranteed income (state pension and other pension) and the gap is what you will have to fund from your remaining pension pots / other sources. You may want to buy an annuity or drawdown your pension point at £x per year, no right or wrong answer here, it’s what will work for you the best.

frankieboy · Post by **frankieboy** » 06 Oct 2020, 18:43

Thanks for the advice everyone, such a grey area, state pension might rise to 68, 69 or even 70 over the next few years. I'm only 30 hours per week and don't do much overtime so my take home pay is around £16k a year, which for me is plenty. Draw down seems a good option for me as when I turn 60 I'm thinking of reducing my hours to 18 hours per week. I live a simple life compared to some, one holiday a year, no expensive hobbies etc.

Post by **wacko74** » 08 Nov 2020, 07:37

frankieboy wrote:
RobertT wrote: Latest figures show I have £120000+ in my Royal Mail pension pot but really don't if it will be enough to see me alright in retirement.

How do we find out what our actual RM 'pot' is?

The only figures I ever see in the statements we receive are the annual amounts we'll (possibly) get at NRA60 and NRA65

Post by **RobertT** » 08 Nov 2020, 07:48

wacko74 wrote:
frankieboy wrote:
RobertT wrote: Latest figures show I have £120000+ in my Royal Mail pension pot but really don't if it will be enough to see me alright in retirement.
How do we find out what our actual RM 'pot' is?

The only figures I ever see in the statements we receive are the annual amounts we'll (possibly) get at NRA60 and NRA65

The original post relates to the RM Defined Contribution Plan, which is basically just a savings account, so it's worth whatever it's worth.

But it sounds as if you have benefits via the RMSPS and RMPP. If so, just use the calculations on page 12 of the plan guide. https://www.royalmailpensionplan.co.uk/ ... v2.0sp.pdf" onclick="window.open(this.href);return false;

Post by **stephen500** » 08 Nov 2020, 15:19

frankieboy wrote:I have 10 more years before I retire and read a lot of posts on here, most go straight over my head. So on average how much do you need in your pension pot to give you say £100, £200 or whatever amount of weekly pension ?

My pot was approx £327,300 (section B) and my pension (NRA 60 2 months early, NRA 65 5 years and 2 months early) is around £11847 or £987 per month.