Calculating monthly pension

[panda64]

Could someone please give me an idea of how I can calculate what my monthly pension should be from the 25% lump sum I received? Would be grateful.

[renrag40]

Divide the maximum tax free lump sum by 80 will give you a fairly accurate monthly pension figure.

[RobertT]

Could someone please give me an idea of how I can calculate what my monthly pension should be from the 25% lump sum I received? Would be grateful.

Just divide it by the number of months you want it to last.

Or have you had your pension and lump sum and you want to make sure the figures add up?

[roadrunner bill]

Does your royal mail pension last until you die.. or can it run out..

[deltaforce]

For life and then half to your spouse or nominated qualified dependent. Not sure if that’s the case in all sections

[stephen500]

Divide the maximum tax free lump sum by 80 will give you a fairly accurate monthly pension figure.

The above seems about right, using your idea above,
However I did not include my Excess cash balance scheme in the Tax free lump sum at all and left that out.(even though 25% of that is tax free)
So yes what you said works as a rough calculation.

[stephen500]

Does your royal mail pension last until you die.. or can it run out..

Yes until you die.
Its a good job that the Royal Mail pension didn't just end up as a cash balance scheme, or that would have meant, for future RM employees that they would have got cash and as soon as that ran out, well too bad.
The other benefit to RM would have been no yearly inflation increases.
It is good then, that the new CDC scheme is a mixture of pension for life and a lump sum.

[panda64]

Could someone please give me an idea of how I can calculate what my monthly pension should be from the 25% lump sum I received? Would be grateful.

Just divide it by the number of months you want it to last.

Or have you had your pension and lump sum and you want to make sure the figures add up?

I have had the 25% lump sum and I have been getting the pension for over a year but I think RMSPS have got the figures wrong. I don't think I am getting the right amount each month based on the lump sum and I need to check it. I just need the formula or calculation to check my monthly payment. I haven't a clue when it comes to pensions. Thanks for all the replies.

[stephen500]

Could someone please give me an idea of how I can calculate what my monthly pension should be from the 25% lump sum I received? Would be grateful.

Just divide it by the number of months you want it to last.

Or have you had your pension and lump sum and you want to make sure the figures add up?

I have had the 25% lump sum and I have been getting the pension for over a year but I think RMSPS have got the figures wrong. I don't think I am getting the right amount each month based on the lump sum and I need to check it. I just need the formula or calculation to check my monthly payment. I haven't a clue when it comes to pensions. Thanks for all the replies.

There are a few variables, are you section B or C.
Section B get a lump sum automatically and to get the max lump sum of 25% on NRA 60 give up around 15% of their pension.
For NRA 65 the waters are muddier as some of the pension, if not all they would have given up is reduced by the Cash balance scheme.
Whereas for section C they give up, up to 25% of their pension to get a max tax free lump sum.
As for me.
My lump sums in total were NRA 60 = £67312 and NRA 65 £11678 Total £78,990 (tax free 25% lump sum)
Pensions Nra 60 £841.41 + NRA 65 £145.99 Total monthly pensions of £987.40
£78,990 divided by 80 = £987.37 , which is nearly spot on what I am getting as a section B pensioner (Nov 2020)
So for a section B member/pensioner dividing the tax free lump sum by 80 appears to be a good formula for working out your monthly pension.
My cash balance excess fund to come is £7800.
If you have not taken your NRA 65, you can expect more money from RMSPS when you do, both as a lump sum and a monthly pension.
My NRA 65 pension from RMSPS which I have included in the figures above was £519 a year £43.25 a month and £3450 as a max tax free lump sum.

[RobertT]

Could someone please give me an idea of how I can calculate what my monthly pension should be from the 25% lump sum I received? Would be grateful.

Just divide it by the number of months you want it to last.

Or have you had your pension and lump sum and you want to make sure the figures add up?

I have had the 25% lump sum and I have been getting the pension for over a year but I think RMSPS have got the figures wrong. I don't think I am getting the right amount each month based on the lump sum and I need to check it. I just need the formula or calculation to check my monthly payment. I haven't a clue when it comes to pensions. Thanks for all the replies.

I don't think anyone on this forum knows for sure what the exact formula is for calculating their pension and lump sum, as it can vary a bit depending on the section you're in, age, etc.

For a rough guide use the info on page 12 of the plan guide: https://www.royalmailpensionplan.co.uk/ ... v2.0sp.pdf

Dividing lump sum by 80 will also give a good ballpark figure.

[RobertT]

Does your royal mail pension last until you die.. or can it run out..

It depends which scheme you're in!

If you have NRA60 and NRA65 benefits via the RMSPS and RMPP, then you get a pension for life which increases each year with inflation and provides spouses benefits on your death too.

However if you joined RM after 1st April 2008 you only have access to the DC scheme via Scottish Widows and those who've been in that for 5+ years can join the DBCBS(section F) instead.

The DC scheme is basically just a savings account, which you can buy an annuity(income for life) with if you want to.
Otherwise you can draw down the money over a period of time of your choosing, in which case it could run out!

Section F of the DBCBS only provides a lump sum at 65(reduced if taken earlier) and only 25% of that is guaranteed to be tax free. Or you can transfer to a DC scheme for the flexibility mentioned above.

The planned CDC scheme aims to do the same as the RMSPS/RMPP, but the pension element isn't guaranteed and can go up or down, depending on the returns of the investments held within the scheme.
That will replace all existing schemes, when it's implemented.

[NWpostie]

That will replace all existing schemes, when it's implemented.

By that I presume they will be frozen, only increasing with inflation rate and investment returns.

I would also assume our AVC payments will stop, because CDC is a completely different scheme.

The unknowns are implementation dates and what happens to the previous schemes.


In the meantime I'm banging in the max I can while staying under the PSE limit.

[RobertT]

That will replace all existing schemes, when it's implemented.

By that I presume they will be frozen, only increasing with inflation rate and investment returns.

NRA60 and NRA65 benefits already increase with inflation each year. I suspect where RPI is currently used, that may well be replaced by CPI, as is the case with all deferred/preserved RM pensions.

The DBCBS currently increases by somewhere between 0% and CPI +4%, depending on investment returns and RM policy, I assume that will continue.

DC pensions and AVC's will continue to fluctuate in line with the fund/s you're invested in.

I would also assume our AVC payments will stop, because CDC is a completely different scheme.

That's what I assume will happen - I can't see any realistic alternative.
What you've already got in AVC's(Flexilan & Bonusplan) will still be used to fund the tax free lump sum when taking your NRA60 & NRA65 benefits.

The unknowns are implementation dates and what happens to the previous schemes.

There's still one stage of the legislation to go and then Royal Assent, which is just a formality. It's expected to become law sometime in the first quarter of 2021.
The implementation date of the RM CDC scheme is therefore unknown, but later this year has been mentioned in a few reports I've read.

See above for previous schemes.

In the meantime I'm banging in the max I can while staying under the PSE limit.

You may as well while you still can.

[NorthernBoy]

I have had the 25% lump sum and I have been getting the pension for over a year but I think RMSPS have got the figures wrong. I don't think I am getting the right amount each month based on the lump sum and I need to check it. I just need the formula or calculation to check my monthly payment. I haven't a clue when it comes to pensions. Thanks for all the replies.


Panda, it might be worth finding your original letter from the pension people and posting what it said for your monthly pension and lump sum. State what pension it is, eg NRA60/65, other.

Someone on here will be able to have a look at it and see if it makes sense and may be able to advise you.

[roadrunner bill]

Does your royal mail pension last until you die.. or can it run out..

It depends which scheme you're in!

If you have NRA60 and NRA65 benefits via the RMSPS and RMPP, then you get a pension for life which increases each year with inflation and provides spouses benefits on your death too.

However if you joined RM after 1st April 2008 you only have access to the DC scheme via Scottish Widows and those who've been in that for 5+ years can join the DBCBS(section F) instead.

The DC scheme is basically just a savings account, which you can buy an annuity(income for life) with if you want to.
Otherwise you can draw down the money over a period of time of your choosing, in which case it could run out!

Section F of the DBCBS only provides a lump sum at 65(reduced if taken earlier) and only 25% of that is guaranteed to be tax free. Or you can transfer to a DC scheme for the flexibility mentioned above.

The planned CDC scheme aims to do the same as the RMSPS/RMPP, but the pension element isn't guaranteed and can go up or down, depending on the returns of the investments held within the scheme.
That will replace all existing schemes, when it's implemented.

Hi, thank you,.
I've worked for royal mail 30 years now, so I'm in the section c pension.. I tend to take my MRA 60 at 55. I'm 50 now, son5 years away... many thanks Robert..