Final Salary Pension

[rogersh]

Hi Robert, You posted this previously in explaining the RM pensions.

"The benefits have accrued on a final salary basis up to 31st March 2008 and a Career Salary Defined Benefit(CSDB) basis from 1st April 2008 to 31st March 2018.

However benefits are paid out on a NRA60 & NRA65 basis, with NRA60 relating to service up to 31st March 2010 and therefore including all final salary benefits and the first two years of CSDB benefits."

A colleague spoke to me last week & said he was intending to change his shift to nights to earn more next year (i think he meant from age 59 to 60) thereby increasing his "final salary" pension.

It occurred to me that, as the scheme closed in 2008, his thinking is incorrect.
What period would be used to calculate the final years' salary. Would it be 2009 to 2010. ?

[freespeech]

Hi Robert, You posted this previously in explaining the RM pensions.

"The benefits have accrued on a final salary basis up to 31st March 2008 and a Career Salary Defined Benefit(CSDB) basis from 1st April 2008 to 31st March 2018.

However benefits are paid out on a NRA60 & NRA65 basis, with NRA60 relating to service up to 31st March 2010 and therefore including all final salary benefits and the first two years of CSDB benefits."

A colleague spoke to me last week & said he was intending to change his shift to nights to earn more next year (i think he meant from age 59 to 60) thereby increasing his "final salary" pension.

It occurred to me that, as the scheme closed in 2008, his thinking is incorrect.
What period would be used to calculate the final years' salary. Would it be 2009 to 2010. ?

Final salary pension was on this years annual statement so this can be compared with current salary. If there has been no change in the "job family" since the scheme ceased then it would have attracted yearly increases.

[RobertT]

It used to be the case that if you increased your pensionable pay and/or pensionable allowances in the years approaching retirement, you also increased the value of your final salary and CSDB pensions.

But the link between actual pay and pensionable pay was removed in 2014, so our pensions increase in line with RPI each April(previous September figures) regardless of whether we get a pay rise or not.
Unless you get a promotion within the same 'pay grouping', in which case your pension entitlement will increase.

As moving from days to nights isn't a promotion, it won't increase either final salary or CSDB pension entitlement, as far as I'm aware.

However the added benefit of night allowance will mean a higher amount of DBCBS cash being built up and a bigger CDC pension when that's implemented.

For further info on the 2014 changes see here and scroll down to the bottom of the page.

[rogersh]

Thank you Robert for the response which clarifies my question. Being in the DC scheme I do not receive the annual statement to which "freespeech" refers.
For some reason (perhaps because i am over 60) some colleagues think i know about pensions. I usually refer to this forum for information & your contribution is appreciated.(& FREE!)
I will show my colleague your response.

[rambo1]

It used to be the case that if you increased your pensionable pay and/or pensionable allowances in the years approaching retirement, you also increased the value of your final salary and CSDB pensions.

But the link between actual pay and pensionable pay was removed in 2014, so our pensions increase in line with RPI each April(previous September figures) regardless of whether we get a pay rise or not.
Unless you get a promotion within the same 'pay grouping', in which case your pension entitlement will increase.

As moving from days to nights isn't a promotion, it won't increase either final salary or CSDB pension entitlement, as far as I'm aware.

However the added benefit of night allowance will mean a higher amount of DBCBS cash being built up and a bigger CDC pension when that's implemented.

For further info on the 2014 changes see here and scroll down to the bottom of the page.

Robert, if you leave before drawing your final salary section aged 60 benefits, do they cease to increase yearly ? Or do they still increase even if you have left the company?

[RobertT]

Robert, if you leave before drawing your final salary section aged 60 benefits, do they cease to increase yearly ? Or do they still increase even if you have left the company?

Any RM pension benefits you 'leave behind' will be preserved/deferred and should increase by CPI each April until you take them.
But your DBCBS pot will increase by whatever RM decide, but the aim is 'in excess of CPI'.

[tractorboy2]

It used to be the case that if you increased your pensionable pay and/or pensionable allowances in the years approaching retirement, you also increased the value of your final salary and CSDB pensions.

But the link between actual pay and pensionable pay was removed in 2014, so our pensions increase in line with RPI each April(previous September figures) regardless of whether we get a pay rise or not.
Unless you get a promotion within the same 'pay grouping', in which case your pension entitlement will increase.

As moving from days to nights isn't a promotion, it won't increase either final salary or CSDB pension entitlement, as far as I'm aware.

However the added benefit of night allowance will mean a higher amount of DBCBS cash being built up and a bigger CDC pension when that's implemented.

For further info on the 2014 changes see here and scroll down to the bottom of the page.

I was reading the RMPP website the other day ,and on there somewhere it said that final salary was current pensionable pay and the number of years service till 31/03/08.
So this is incorrect ?

[RobertT]

Final salary pensionable pay is slightly different to CSDB pensionable pay. See the glossary section of the 'members guide to benefits' for more info.

There is 3 definitions of pensionable pay:

CBDB pensionable pay – for all service from 2008
Pensionable pay – for section C FS pension accrued up to 2008
Pensionable salary – for section A/B FS pension accrued up to 2008

Pensionable pay was delinked from actual pay in 2014 and therefore increases by RPI each April regardless of whether we get a pay rise.

Your pensionable pay should be shown on your payslip as 'pensions contrib. pay'.

[tractorboy2]

So the RMPP is incorrect.
Won't be much of an addition this year then , as RPI was pretty dire last September , always assuming I understand things correctly.

[RobertT]

It's correct!

Final salary(service up to 2008) pay is worked out as basic pay and pensionable allowances as of 1st April 2014, plus RPI increases each year.

[Duran]

It's correct!

Final salary(service up to 2008) pay is worked out as basic pay and pensionable allowances as of 1st April 2014, plus RPI increases each year.

Hi Robert. Would transfer to LGC Driver (Class 1/2) Be considered a promotion, therefore increasing pensionable final salary NRA60 ?

In 2 minds here. Currently Ex PHG full Pensionable night allowance. Also with Mech allowance. From well before 2014.

[RobertT]

It doesn't sound like a promotion to me, just a change of job.

[Duran]

I think they class it as a promotion as you lose Ex PHG Pay. Similar to if you go over to the dark side and become a manager. Or so i'm told. Hard to get the correct information out of Royal Mail. 90% Managers just baffle you with nonsense. Hence the reason i'm looking for the correct answer to my question. I get different opinions.

[tractorboy2]

I agree with Robert T , I don't see any way that would be classed as a promotion.

[Duran]

I agree with Robert T , I don't see any way that would be classed as a promotion.

The only way i see it as a promotion. Basic pay before allowances. Is just under £600 per week for class 2. Other than MGV grade, which is around £550 per week. I think all other OPG's are the same Basic pay. I guess this would come under Pensionable salary,not pensionable pay. I'm hoping NRA60 for pensionable salary is based on the best of your last 3 years of service. Done 26yrs for NRA60 24 Final Salary 2 Career Blocks.