Pension Pot

[Duran]

Sorry guys. I've looked through both illustrations and can't figure out where the cash pot pension built up since 2018 is located, for 2018/19 and 2019/2020. Need help with this.

Ive also noticed from a 2009 pension illustration. Up to April 2008 I have 23 years service. My pensionable pay back then was £23.509 . If i retired at 60 (2026). it shows an annual pension of £10.692 Total lump sum of 33,236. I'm now on £30.700 Pensionable pay and my figures for NRA 60 are £9.530.76 Total lump sum £28.592.28 . Over 36years service in the pot. 5.5 years till im 60. I know these are only estimates based of current values. How the hell does a pension pot decrease so much in 11 years. Despite pensionable pay rising by over £7000 ?

[stephen500]

Sorry guys. I've looked through both illustrations and can't figure out where the cash pot pension built up since 2018 is located, for 2018/19 and 2019/2020. Need help with this.

Ive also noticed from a 2009 pension illustration. Up to April 2008 I have 23 years service. My pensionable pay back then was £23.509 . If i retired at 60 (2026). it shows an annual pension of £10.692 Total lump sum of 33,236. I'm now on £30.700 Pensionable pay and my figures for NRA 60 are £9.530.76 Total lump sum £28.592.28 . Over 36years service in the pot. 5.5 years till im 60. I know these are only estimates based of current values. How the hell does a pension pot decrease so much in 11 years. Despite pensionable pay rising by over £7000 ?

Your pensionable pay is almost the same as mine - I had 27 years service in final salary. 10 years in CSDB and since 2018 in the cash balance (DBCBS) Current service 39 years- retiring in Nov.
Taking NRA 60 2 months early and NRA 65, 5 years and 2 months early.
If the new scheme comes in next Apr (2021) you will have three years in the cash balance scheme and around five years in the CDC scheme.
-------------------------------------------------------------
Now to your question
The cash pension pot? Do you mean the Defined Cash balance scheme (cash balance)
Most of that is used for your NRA65 and is found on page 2 of "your benefits in a nutshell" from RMPP.
And the cash balance part of this illustration is the temp scheme we are in from 2018.
Your pensionable pay is the same as mine and my cash balance for this year should be £5900 (not shown- next years illustration 2020-2021)
"age 65 Cash balance fund at 31st March 2020 = £11,500 (£5700 x 2 2018-2020)
Your RMSPS (capita) illustration shows your pensionable pay at the time the final salary scheme closed, so will be lower than your current pensionable pay.
It also shows your standard lump sum.
My standard Lump sum was £33770 (pension £11,211.58) and became £63,848 as a max lump sum and reduced pension of £9577 (NRA60 RMSPS) Taking 2 months early. (option 2)
My standard Lump sum was £1976 (pension £600.34) and became £3463 as a max lump sum and reduced pension of £519 (NRA 65 RMSPS) taking 5 years and 2 months early. (option 2)
-------------
For your info I chose for NRA 65 RMPP option 2A making (in my opinion, best use tax wise of the DBCBS- cash balance)
Basic annual pension £1751
Tax free cash lump sum - Main benefits (1) £5767 (this would have been my min LS and my pension would have been reduced to £1531 without DBCBS and a max LS of £10208) But with Cash bal no reduction needed in standard pension)
Tax free Lump sum DBCBS (2) £5911
Total TAX free lump sum (1+2) = £11678
Excess DBCBS £7865 (25% tax free, 75% taxed at your tax rate - I guess 20%) £1179 tax. (Excess DBCBS payable up to 12 weeks after you take your pension.)

pen 3.jpg

pen 4.jpg

RMPP pension with DBCBS 4.jpg

As for the CDC scheme that should be 1/80 of your pensionable pay ( £30.700 Pensionable pay) £383 per year x 5 years £1918 and a standard DBCBS for CDC of 3/80 of pensionable pay £5756 to be added to the above.
However I don't know (Perhaps Robert T does) if you can take the CDC pension pot and convert some of the pension into a 25% tax free pot. Ie £383 x 20 = £7660 pot and take 25% of that tax free. If you can that would mean a 25% tax free lump sum of £1915 and a pension of £1438 (if you have to give up 25% of CDC pension for 25% tax free cash?) to be added to your final salary, CSDB and your DBCBS (cash balance) to this CDC scheme.

[RobertT]

Sorry guys. I've looked through both illustrations and can't figure out where the cash pot pension built up since 2018 is located, for 2018/19 and 2019/2020. Need help with this.

Ive also noticed from a 2009 pension illustration. Up to April 2008 I have 23 years service. My pensionable pay back then was £23.509 . If i retired at 60 (2026). it shows an annual pension of £10.692 Total lump sum of 33,236. I'm now on £30.700 Pensionable pay and my figures for NRA 60 are £9.530.76 Total lump sum £28.592.28 . Over 36years service in the pot. 5.5 years till im 60. I know these are only estimates based of current values. How the hell does a pension pot decrease so much in 11 years. Despite pensionable pay rising by over £7000 ?

I haven't received my RMPP illustration yet, so can't really comment on where the Cash Balance(DBCBS) is to be found. Plus I'm in section C anyway, to your section B and I'm sure the illustrations will differ in layout to some degree.

But if my section C illustration from 2009 is anything to go by, it was assuming the CSDB pension would continue until I reach 60 years of age. In practice it stopped in 2018, in my case when I was 50. So it's reasonable to expect todays actual figures to be lower.

[RobertT]

However I don't know (Perhaps Robert T does) if you can take the CDC pension pot and convert some of the pension into a 25% tax free pot. Ie £383 x 20 = £7660 pot and take 25% of that tax free. If you can that would mean a 25% tax free lump sum of £1915 and a pension of £1438 (if you have to give up 25% of CDC pension for 25% tax free cash?) to be added to your final salary, CSDB and your DBCBS (cash balance) to this CDC scheme.

I think you're muddying the waters a bit there Stephen. The CDC scheme hasn't started yet and Duran is only asking why his current pension is lower than he expected. Plus, as the legislation hasn't gone through yet, we don't know exactly how the CDC scheme will work anyway.

But if you want an answer:

The plan is that the CDC scheme will have a Defined Benefit Lump Sum Scheme(DBLSS) sitting alongside it to provide tax free cash, in a similar way to how the Defined Benefit Cash Balance Scheme(DBCBS) provides tax free cash when taking (predominantly NRA65) benefits from the RMPP.

As far as I'm aware there are no plans to be able to commute some CDC pension for a higher lump sum, but it may be possible to make a transfer to an individual DC scheme, in a similar way to the CETV process with a DB scheme.
But the legislation will determine what will actually be possible. Until that's in place and the RM scheme is actually set up, we won't know for sure.

RM have published their Anticipated CDC design, which can be found here: https://www.royalmailgroup.com/media/10 ... ooklet.pdf" onclick="window.open(this.href);return false;

[Duran]

Hi Stephen. Thanks for that. You have 3 more years then me in Final salary. My NRA is made up of 24 yrs Final salary and 2yrs Career blocks to 2010. I presume my NRA 65 will be exactly the same if i take it 5yrs 2months early. Having said that i have 5 years to go to reach 59yrs 10 months.lol.

Pension pot. Yes i ment cash balance pension earned since 2018. Don't know where that is.

Now you have thrown another spanner in my works. Your NRA 60 Final salary pension figures. Are they base on your pensionable pay when plan shut down in 2008. Or are they based on final salary for this year ?

This is all a complete nightmare. Back in 84 i was told work 40years and receive a final salary pension 40/80ths of your pensionable pay. So you expect on todays pensionable pay 0f £30.700 £15,000 a year pension and £45,000 at 58. We now have to work longer for one third less yearly pension. For those with no final salary part of pension. They gonna feel the hardship even more.

[Duran]

Hi Robert. Yeah Stephen threw alot at me. However it was good of him to show is pension figures as it as cheered me up somewhat. With the increase tax free lump sum options. For very little loss in annual pension.

[freespeech]

Hi Robert. Yeah Stephen threw alot at me. However it was good of him to show is pension figures as it as cheered me up somewhat. With the increase tax free lump sum options. For very little loss in annual pension.

They are relatively small losses but remember you get the lump sum once but will receive the "loss" in a lower pension every month for the rest of your life. In the workings I have done the break even point is around 20 years and it will depend what you use the LS for. If it's to pay off a mortgage that may well be sensible in comparison but if it is blown on a great holiday and a new car then you may well regret it.......unless you die within a few years!

[stephen500]

Hi Stephen. Thanks for that. You have 3 more years then me in Final salary. My NRA is made up of 24 yrs Final salary and 2yrs Career blocks to 2010. I presume my NRA 65 will be exactly the same if i take it 5yrs 2months early. Having said that i have 5 years to go to reach 59yrs 10 months.lol.

Pension pot. Yes i ment cash balance pension earned since 2018. Don't know where that is. (page 2 RMPP illustration)

Now you have thrown another spanner in my works. Your NRA 60 Final salary pension figures. Are they base on your pensionable pay when plan shut down in 2008. Or are they based on final salary for this year ?

This is all a complete nightmare. Back in 84 i was told work 40years and receive a final salary pension 40/80ths of your pensionable pay. So you expect on todays pensionable pay 0f £30.700 £15,000 a year pension and £45,000 at 58. We now have to work longer for one third less yearly pension. For those with no final salary part of pension. They gonna feel the hardship even more.

I don't know for sure, which pensionable pay they used! Sorry.
But I was pleasantly surprised with my lump sum.
My overall pension taking the max lump sum for both schemes and the cash balance was £85.000 and my pension (nra60 reduced for max lS and 2 months early) (NRA 65 reduced for 5 years 2 months early was £11800. Using £57000 of lump sum to divide by 7 years to give me an annual income of £20,000. Not taxable.
For me it was option 2 for RMSPS (NRA 60 and 65) and option 2A (NRA 65 RMPP and DBCBS)

[Duran]

Hi Stephen. Yes i see your plan. Divide lump sum in annual income . Until you can claim State Pension. Allowing you to retire at 59years and 10months. on a £20000 a year annual pension. Great idea. I may follow suit.lol.

[stephen500]

Hi Stephen. Yes i see your plan. Divide lump sum in annual income . Until you can claim State Pension. Allowing you to retire at 59years and 10months. on a £20000 a year annual pension. Great idea. I may follow suit.lol.

The longer you stay, the more chance they will carry you out in a box.
Part of me will miss work, but David Cameron had no problem retiring early, why can't we.
What helps is being mortgage and rent free. That saves me £600 at least per month.
I am putting all my bill money into one account and then I know what I have left for the rest of the year.

[NorthernBoy]

Hi Robert. Yeah Stephen threw alot at me. However it was good of him to show is pension figures as it as cheered me up somewhat. With the increase tax free lump sum options. For very little loss in annual pension.

My opinion is that his conversion rate is okay but not spectacular. I think for his nra60 it works out at 18.5 for every £1 he gives up.
If you need the lump sump for your mortgage or simply need the money to support your retirement until the state pension kicks in then I can see the attraction.

If your pension is over £12500 then clearly the conversion rate is better as you would be paying tax on the income, if under then maybe it’s not so clear cut. Again it’s all down to personal circumstances, no right or wrong here.

[stephen500]

Sorry guys. I've looked through both illustrations and can't figure out where the cash pot pension built up since 2018 is located, for 2018/19 and 2019/2020. Need help with this.

Ive also noticed from a 2009 pension illustration. Up to April 2008 I have 23 years service. My pensionable pay back then was £23.509 . If i retired at 60 (2026). it shows an annual pension of £10.692 Total lump sum of 33,236. I'm now on £30.700 Pensionable pay and my figures for NRA 60 are £9.530.76 Total lump sum £28.592.28 . Over 36years service in the pot. 5.5 years till im 60. I know these are only estimates based of current values. How the hell does a pension pot decrease so much in 11 years. Despite pensionable pay rising by over £7000 ?

I haven't received my RMPP illustration yet, so can't really comment on where the Cash Balance(DBCBS) is to be found. Plus I'm in section C anyway, to your section B and I'm sure the illustrations will differ in layout to some degree.

But if my section C illustration from 2009 is anything to go by, it was assuming the CSDB pension would continue until I reach 60 years of age. In practice it stopped in 2018, in my case when I was 50. So it's reasonable to expect todays actual figures to be lower.

The cash balance is on page 2 of the RMPP illustration.

[baldrick]

Part of me will miss work, but David Cameron had no problem retiring early, why can't we.

I thought I would miss work and be bored doing nothing too. It did take me a few months to 'decompress' and get used to not having to go to work.
But then I adjusted and didn't miss work at all.

[Duran]

Hi Stephen found it £12.200 thanks. My Pensionable pay will be increasing soon as transfered to LGC. (Nights). Will do 5 more years there. Thats why i was asking is NRA60 based on final pensionable pay from 2008 When final salary scheme close. Or is it based on final salary pensionable pay at retirement.

[tractorboy2]

Hi Stephen found it £12.200 thanks. My Pensionable pay will be increasing soon as transfered to LGC. (Nights). Will do 5 more years there. Thats why i was asking is NRA60 based on final pensionable pay from 2008 When final salary scheme close. Or is it based on final salary pensionable pay at retirement.

I'd like to know the answer to this question as well !!
If it is based on your final pensionable pay in 2008 , does this increase at all ?