Excess cash balance -DBCBS 12 weeks reconciliation period

[stephen500]

Well it getting closer to 12 weeks, it's actually 8 and so far every thing has gone smoothly and I have my tax codes attached to my pensions. I am expecting my excess cash balance DBCBS within the next 4 weeks. Has any one else had theirs yet and was it to time? I have no reason to expect it won't arrive on time.

[Hawkey99]

Is this the last bit they keep until everything is sorted. Something like 10% ??

Been an interesting journey for you but what a palaver...

Understand the different pensions held by different people but surely at some stage they will come up with a better process for paying it....??

Good Luck

[RobertT]

Is this the last bit they keep until everything is sorted. Something like 10% ??

It's the excess DBCBS - the bit that's left after you've taken the maximum tax free amount.
What's left is paid out as a UFPLS, with the first 25% also being tax free and the rest taxable at your marginal rate.

Been an interesting journey for you but what a palaver...
Understand the different pensions held by different people but surely at some stage they will come up with a better process for paying it....??

Considering it's only been a year or so since they made it more complicated to claim our pensions via both the PSC and Capita, I can't see them changing it back anytime soon!

[stephen500]

Is this the last bit they keep until everything is sorted. Something like 10% ??

Been an interesting journey for you but what a palaver...

Understand the different pensions held by different people but surely at some stage they will come up with a better process for paying it....??

Good Luck

It's as Robert T says above. Btw, get your tax code sorted before they pay it . Mine is now BR Gum. (RMPP, who pay the excess, UCLS) BR means basic rate, 20%. Which means I should pay 20% tax on 75% of that lump sum, with 25% tax free. For those still working and paying 40% on your income, I have no idea how they will take your 40% on the excess, whether that be from the excess or via your wages.

[antcpfc]

Hi everyone go easy on me if this is a silly question.
I have received my statement of 65 benefits . If I tick option 3 which uses the lump sum to build a bigger pension do I then get the dbcbs as a lump sum?
Thanks in advance.

[RobertT]

Hi everyone go easy on me if this is a silly question.
I have received my statement of 65 benefits . If I tick option 3 which uses the lump sum to build a bigger pension do I then get the dbcbs as a lump sum?
Thanks in advance.

The DBCBS is paid out as a lump sum regardless of whether you take your standard lump sum as cash or convert it into pension.

I assume you're in section B, it sounds like you are?
The problem with section B is you're getting 2 lump sums - 1 as standard and 1 from the DBCBS, meaning you will probably end up paying tax on the DBCBS. Obviously depending on individual circumstances.

Using the standard lump sum to increase your pension is one way of mitigating that, but I don't think the commutation rate(the amount of pension you get for giving up some or all of the lump sum) is very good.

There are people on this forum who have personal experience of the 'section B DBCBS process', namely Stephen500, who might be along in due course to give you some first hand knowledge. As I'm not old enough to even get a pension quote and I'm also in section C.

[antcpfc]

Thanks. Yes I am in section B as I joined in1985.

[Aquarius]

Is this the last bit they keep until everything is sorted. Something like 10% ??

Been an interesting journey for you but what a palaver...

Understand the different pensions held by different people but surely at some stage they will come up with a better process for paying it....??

Good Luck

100% agree - pensions are a right mess now

[stephen500]

Thanks. Yes I am in section B as I joined in1985.

Personally and this is my personal opinion, you will have to make YOUR OWN choice, I would never choose option 3 for NRA 65 from RMPP.
You are giving up all your tax free lump sum (with the exception of the cash balance scheme, and even with taking option 3B you lose money from that as well)
With my illustrations, which I will show below. (these figures are from my pension illustrations, that I went on to take in Nov of 2020)
Option 2 is a reduced pension with max cash free lump sum (seperate from DBCBS) of £1531.32 and a max tax free lump sum of £10208.82.
Option 3 is a max pension with options for your DBCBS. My max pension was £1898.01.
Option 3B is a max pension of £1898.01 and DBCBS of £12653.39, which is less than the value of my DBCBS of £13776.81
So if I took option 3B I lose out on £1123 of my DBCBS.
Also I lose £10208.52 of my max cash free lum sum, a loss of £11,332.24 for a pension yearly gain of £366.69.
In other words if I divide £11,332.24 by £366.69, you can see I would have to live for 30 years to make back the loss of my lump sums.
As for option 3, you still get your DBCBS choosing different options, one of which is to take it as an UCLS with 25% tax free and 75% taxed at your tax rate. But you are still giving up your max lump sum, which will take around 30 years to get back.
Personally, and I did this. I took option 2A, which I think is the most tax efficent way of taking your lump sums.
That way, my pension was not reduced by the normal 15%. I also got my min tax free allowance and had it made up to what would have been my max lump sum, by some of my DBCBS. With the rest of the DBCBS (my excess cash balance scheme, having taken all of my 25% available tax free cash), for me, being paid as an UCLS paid as being still 25% tax free and 75% taxable, at your tax rate (paid around 12 weeks after your pension)
This opinion is only for section B.
So Personally NO way would I take option 3 or 3B. As Robert T says "the commutation rate is very poor" (paraphrasing) Ie it will take you around 30 years to get your money back.
I took option 2A.
Any more questions, just ask. I am not a financial advisor.

RMPP pension with DBCBS 4.jpg

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