Section B Quote

[Rocketman46]

Hi all,
I’m a section B member with currently 32 years paying into pension. I’m age 50 Postman.
Do these quotes sound about right? Thought they looked a bit low.

Is that all I will get at 60 or will the next 10 years contributions make a difference? Or is that just going in the 65 pot?
Also thought the lump sum at 60 was low too!

I hope to retire at 60 so what would I roughly get with another 10 years service?

Sorry a lot of questions
Thanking anybody that can help!

RMSPS
Age 60- pension £6500
Lump sum £19750

Age 65- pension £620
Lump sum £1860


RMPP
Age 60- £0

Age 65-
CSDB Pension £1800
CSDB tax free lump sum £5500
Cash balance fund £9600

[freespeech]

Hi all,
I’m a section B member with currently 32 years paying into pension. I’m age 50 Postman.
Do these quotes sound about right? Thought they looked a bit low.

Is that all I will get at 60 or will the next 10 years contributions make a difference? Or is that just going in the 65 pot?
Also thought the lump sum at 60 was low too!

I hope to retire at 60 so what would I roughly get with another 10 years service?

Sorry a lot of questions
Thanking anybody that can help!

RMSPS
Age 60- pension £6500
Lump sum £19750

Age 65- pension £620
Lump sum £1860


RMPP
Age 60- £0

Age 65-
CSDB Pension £1800
CSDB tax free lump sum £5500
Cash balance fund £9600

Are you 100% sure you are section B? 32 years ago the plan had closed and new starters would have been in section C. You needed a start date before April 87 to be in A or B (so at least 33 years).

[RobertT]

Hi all,
I’m a section B member with currently 32 years paying into pension. I’m age 50 Postman.
Do these quotes sound about right? Thought they looked a bit low.

Is that all I will get at 60 or will the next 10 years contributions make a difference? Or is that just going in the 65 pot?
Also thought the lump sum at 60 was low too!

I hope to retire at 60 so what would I roughly get with another 10 years service?

Sorry a lot of questions
Thanking anybody that can help!

RMSPS
Age 60- pension £6500
Lump sum £19750

Age 65- pension £620
Lump sum £1860


RMPP
Age 60- £0

Age 65-
CSDB Pension £1800
CSDB tax free lump sum £5500
Cash balance fund £9600

Having recently helped a section B member who's been in the job since 1985/6 with his annual statement, your figures are fairly similar.
Section B members get a lump sum as standard of 3 times pension, so your figures look about right.

You will have the option of increasing your lump sum in return for giving up some pension. Based on your figures, your NRA60 lump sum could be a max of around £38k, but you'll lose about £900 per year pension. I stress those are rough ballpark figures!

More info on your pension can be found on the plan website: https://www.royalmailpensionplan.co.uk/" onclick="window.open(this.href);return false;

I agree with Freespeech that the service you quote doesn't quite match up. To be in section B, you need to currently have at least 33.5 years service and therefore joined the scheme before 1st April 1987. Although the benefits you describe(pension & lump sum) are section B.

You're currently building up a 'cash balance' to take predominantly with your NRA65 benefits. But that is expected to stop within the next 12-18 months at the most, as the new CDC scheme will then be introduced.
Meaning you will then start accruing pension again.

This link gives more info on both current arrangements and the future CDC scheme: https://www.myroyalmail.com/2018pensionreviewqanda" onclick="window.open(this.href);return false;

[Rocketman46]

Thanks for your replies! I am definitely in section B as I started in 1986 as a cadet but didn’t pay into scheme until I was 18 in 1988.

[Rocketman46]

So in the new CDC scheme does that mean my 60 pot will start to increase? Thanks

[freespeech]

Thanks for your replies! I am definitely in section B as I started in 1986 as a cadet but didn’t pay into scheme until I was 18 in 1988.

That is still odd.....as far as I’m aware the pension you are in is determined by date you contributed to the scheme and not the date you started with RM. That certainly applies in my case with a business start of 1988 but pension start of 1990. I transferred in two years which takes me back to 1988 but I really can’t remember what I was thinking to not join the pension scheme when I started.

Perhaps cadets had a contractual right to join section B?

[stephen500]

Hi all,
I’m a section B member with currently 32 years paying into pension. I’m age 50 Postman.
Do these quotes sound about right? Thought they looked a bit low.

Is that all I will get at 60 or will the next 10 years contributions make a difference? Or is that just going in the 65 pot?
Also thought the lump sum at 60 was low too!

I hope to retire at 60 so what would I roughly get with another 10 years service?

Sorry a lot of questions
Thanking anybody that can help!

RMSPS
Age 60- pension £6500
Lump sum £19750

Age 65- pension £620
Lump sum £1860


RMPP
Age 60- £0

Age 65-
CSDB Pension £1800
CSDB tax free lump sum £5500
Cash balance fund £9600

First of all these lump sum figures appear to be your "min lump sum".
This may help. (This is section B)
My pensionable pay for the NRA 60 pension (£28000 approx) (£29000 Csdb)
My actual pension benefits being paid in Nov.
Service, final salary 27 years 42 days.
Service CSDB 10 years or blocks.
Cash balance almost three years.
Full night allowance, PHG reserved rights.
-----------------
NB I took all the bold and underlined choices.
RMSPS
NRA 60
Option 1
Full estimated retirement pension £11,211,58
Estimated standard lump sum £33,770.89
Option 2 Reduced pension £9,577,33
Max lump sum £63,848,87.
Option 3
exchange whole lump sum for higher annual pension of £12,908.59
NRA 65 (RMSPS)
Option 1
Full estimated retirement pension £600.34
Estimated standard lump sum £1,976.44
Option 2 Reduced pension £519.54
Max lump sum £3463.59
Option 3
exchange whole lump sum for higher annual pension of £349.83
--------------------
NRA 65 shown below using photo (RMPP)
I chose option 2A and will take mine at aged 59 and 10 months (ie 5 years and 2 months early) which I personally think is the most tax efficent way for me to take the cash balance scheme.
This keeps your pension at the standard pension and the standard lump sum, with some of your DBCBS added to it tax free to give a total tax free amount. (this allows you to keep the standard pension with the DBCBS being used to push your lump sum up to around, what would have been around your max lump sum.
Added below that is the excess DBCBS scheme.
Note the excess cash balance scheme for my option = 25% tax free and 75% taxed at my tax rate (for me that is 20%)
There are a couple of more options.
1) To transfer your cash balance scheme to another provider.
2) take 25% of whole DBCBS tax free and pay tax on 75%

RMPP pension with DBCBS 4.jpg

You could use my pensionable pay and play around with ratios to try and get to your figures.
I just worked out your NRA 60 and 65 for both schemes and estimate
I got your NRA 60 for a reduced pension and max LS (RMSPS)
Pension £5525
Max lump sum £36,833
NRA 65 (RMSPS)
Reduced pension for max Lump sum
£527
Max Lump sum £3563
Your CSDB (RMPP) seems to be about the same as mine using the slide I provided (but this is taking in Nov of this year)
So make your choice of options there and add that to your figures.
But in reality your cash balance scheme will continue until at least April 2020 and should have a total pot of £14,400. (which is actually about the same as my figure for Nov 2020)
I actually worked your CSDB scheme as estimated (choosing option 2A)
My leaving early will have no effect on your figures as your starting figure of £1800 is around the same as mine, which is £1751.
£1800 Csdb scheme pension
Min LS £5925
DBCBS tax free £6075
Total tax free £12000
Excess Cash balance £8081
Tax payable at 20% £1212
So totals
All annual pensions except CDC
£7852
Total tax free lump sums incl DBCBS £60,477 minus £1212 in tax
It may continue for who knows how long, until the CDC scheme comes in.
--------------------------------

As for your CDC possible benefits, this scheme has not yet been passed into law.
But the proposals are 1/80 pensionable pay per year of service.
3/80 lump sum per year of service, with a chance to add 1% contributions to the lump sum, per year.
If my pensionable pay of say £30,000 was used for a CDC calculation it would result in ( for another 10 years service)
£375 per year annual pension for each years service
£1,125 lump sum per year.
£3750 pension for 10 years service
£11250 lump sum.
This depends on the bill being passed and Royal Mail bringing in the CDC as advertised originally, oh and the annual CDC pension can go down in payment (CDC only)

[stephen500]

So in the new CDC scheme does that mean my 60 pot will start to increase? Thanks

No.
The CDC scheme will be a stand alone scheme.
Your 60 pot increases each year in line with inflation.
The CDC scheme proposal is
1/80 pensionable pay per year.
3/80 lump sum per year.
Plus if you take these benefits early, they prob will be subject to a deduction for early payment, which I guess would be around 5% per year, but nobody actually know the reduction rate.

[stephen500]

Thanks for your replies! I am definitely in section B as I started in 1986 as a cadet but didn’t pay into scheme until I was 18 in 1988.

Look at your pay slip and it will say under deductions "A/B" or "C"

[RobertT]

So in the new CDC scheme does that mean my 60 pot will start to increase? Thanks

No.
The CDC scheme will be a stand alone scheme.
Your 60 pot increases each year in line with inflation.
The CDC scheme proposal is
1/80 pensionable pay per year.
3/80 lump sum per year.

You beat me to it.
But just to add, the CDC scheme will have an NRA of 67.

[stephen500]

So in the new CDC scheme does that mean my 60 pot will start to increase? Thanks

No.
The CDC scheme will be a stand alone scheme.
Your 60 pot increases each year in line with inflation.
The CDC scheme proposal is
1/80 pensionable pay per year.
3/80 lump sum per year.

You beat me to it.
But just to add, the CDC scheme will have an NRA of 67.

Good point!

[Rocketman46]

Many thanks for all your inputs !
It does make you think to put money aside sooner rather than later.

[stephen500]

Many thanks for all your inputs !
It does make you think to put money aside sooner rather than later.

I am using £57000 of my lump sum to divide by seven years, to increase my yearly pension by £8000 approx per year, so I can go at almost 60.

[Rocketman46]

Thanks Stephen for working all that out for me.
So does that mean my pension total would be £7852 + CDC £3750 = £11602. Very roughly I know.
Max Lump sums £60477 + £11250 = £71727
I know this is all very roughly because of CDC not confirmed yet.
Thanks

[heapsy]

The CDC scheme proposal is
1/80 pensionable pay per year.
3/80 lump sum per year.

And that's all it is. The proposal might not turn into reality, sadly. If the 1/80 pensionable pay per year isn't achieved it will be a pretty poor pension.