When can I retire?

[Shirtbuttons]

I’ve done 36 years now and went straight into the pension scheme aged 18. I was told I can only get a maximum 40 years pension back then , but I know that has changed now. Am I correct in thinking if I retire at 60 I will have 42 years or will it be frozen at 58 after 40 years?
Also what is the very earliest I can take my pension without losing 5% per year for taking it early? Will I have to wait until 60 before I can have it without being penalised?

I apologise for my ignorance about this subject but I’ve never really thought about the pension as it always seemed so far away. Then all of a sudden it seems it’s fast approaching.
I’m at the stage now after all these years I won’t miss it and just want to be out.

[RobertT]

It sounds to me as if you're in section B and currently have roughly(without knowing exact dates):

25 years worth of NRA60 pension from 1985 to 2010.
8 years worth of NRA65 pension from 2010 to 2018.
Nearly 3 years of DBCBS from 2018 to 2021.

NRA stands for Normal Retirement Age, so you can take your NRA60 without reduction at 60 and your NRA65 without reduction at 65.
Taking either before NRA will see a 5% per year reduction.

The earliest you can take any of it is 55. If you took it all then your NRA60 would be reduced by 25% and your NRA65 by 50%.

It used to be the case that you could only accrue 40 years worth of pension, but that was changed a few years back to 45. However as the RMPP closed to future accrual in 2018 we haven't been building up any more pension since then, just a lump sum via the DBCBS.

A new Collective Defined Contribution pension scheme is expected to be introduced later this year which will replace all existing RM pensions.
That will provide a pension and lump sum, but has an NRA of 67.

We don't yet know whether the 45 year rule will continue where you left off with the current scheme or not.

More info to be found on these websites:

RMPP: https://www.royalmailpensionplan.co.uk/ There's some handy videos in the media library that might help you understand things a bit better.
RMSPS: https://www.royalmailsps.co.uk/
Future CDC scheme: https://www.myroyalmail.com/2018pensionreviewqanda

[spaceman07]

Thanks for the info, i was planning on taking my pension next may at 55 after 33.5 yrs. Does this mean I'll get a reduction of 60% (12 x 5%)?
Never fully understood the pension statement that i get its spread across various schemes. As things stand what could i expect to get roughly lump sum and monthly pension?

[heapsy]

Your NRA 60 pension would be reduced by 25%. The NRA 65 pension by 50%.

[RobertT]

Thanks for the info, i was planning on taking my pension next may at 55 after 33.5 yrs. Does this mean I'll get a reduction of 60% (12 x 5%)?

The NRA of 67 applies to the planned CDC scheme, which doesn't exist yet!
We don't know what the %age per year reduction will be for CDC either, but 5% is as good a guess as any.

Your existing NRA60 & NRA65 benefits will be reduced as detailed in previous posts.

Never fully understood the pension statement that i get its spread across various schemes. As things stand what could i expect to get roughly lump sum and monthly pension?

You will be able to get a more accurate figure from your own statements than any guess from anyone on this forum!

Each of the 2 statements you received a few months ago, from RMSPS & RMPP, has NRA60 & NRA65 figures on them. Add up your NRA60 figures and take off 5% per year, then do the same with your NRA65 figures.

[stephen500]

I’ve done 36 years now and went straight into the pension scheme aged 18. I was told I can only get a maximum 40 years pension back then , but I know that has changed now. Am I correct in thinking if I retire at 60 I will have 42 years or will it be frozen at 58 after 40 years?
Also what is the very earliest I can take my pension without losing 5% per year for taking it early? Will I have to wait until 60 before I can have it without being penalised?

I apologise for my ignorance about this subject but I’ve never really thought about the pension as it always seemed so far away. Then all of a sudden it seems it’s fast approaching.
I’m at the stage now after all these years I won’t miss it and just want to be out.

For interest and you can ask questions of us as you go along your path to retirement.
First at 60, you will lose none of your NRA 60 pension.
Next at 65, you will lose none of your NRA65 pension.
Third, your DBCBS scheme is in the main linked to your NRA 65, and if you take that at 65, you will not lose any of that fund.
Note the reduction for taking the DBCBS does not appear to me, to be 5% per year.
From memory and Robert T will correct this if I am wrong.
Your final salary NRA 60, is not affected by your continued service as the scheme has stopped and is only increasing by inflation increases.
The same is true of your CSDB as the blocks have ceased.
As for the DBCBS, that should end some time this year due to the new CDC scheme.
The new CDC has no limit of service.
So in answer to your question, your service has no detremintal affect on your pension.
If you take NRA 60 and 65 before 60 and 65, you stand to lose around 5% per year of those pensions.
You could do what I did and take your NRA 60 around 60 and lose very little, and your NRA 65 at 60 and lose 25%
You will also have an array of options and quotes, none of which will include your DBCBS until you decide to go ahead and take the monies.
If you want help working out your DBCBS, please ask and we will help if we can
---------------------
For your interest this is what I got.
What you get as you know will depend on your service, pensionable pay, allowances and your terms and conditions
For me.
27 years service- final salary Approx £23000 pensionable pay (from memory)
10 years CSDB
2 years, 7 months DBCBS.
PHG, Full night allowance (reserved rights PHG)
NRA 60 & 65 RMSPS Annual pension £10,096.87 (option 2, which may not be the best option for you)
NRA 65 RMPP Annual pension £1751.82 (option 2A)
NRA 60 & 65 lump sums RMSPS £67,312.46
NRA 65 Tax free lump sums, including DBCBS £11678.79 (option 2A, which may not be the best option for you)
The balance of my DBCBS as an UFPLS (this was the part, which was over my 25% tax free allowance)
This is 25% tax free and 75% is taxable at your tax rate (mine was 20%)
Of this I received £2394.56 tax free and £7183.66 before tax (£5746 after tax of £1436)
My DBCBS fund value was £15489.66 (after my fund was revised, 12 weeks after payment of first lump sum)
Total Lump sums approx £86,000, with total tax of around £1436.
Total pensions around £11,800.
------------
The CDC should give you more pension and lump sum, although a retirement age of 67. So taking before that would see reductions.
As for NRA 60 and 65 + DBCBS you will get a variety of options and they may not be the same as mine above, especially if you have AVCs
Feel free to ask our opinions at any time.
NB Personally taking NRA 65 at 55 is a huge hit to take, unless you have a managers pension and then it can be reasonable as their pensions are larger as they pay more in!
One thing to consider could be taking NRA 60 at 55 (25% loss) and NRA 65 at 60 (25%)
loss.
I took my NRA 60 at let's say 60 (it was two months early) (1% loss) and NRA 65 at the same time (around 26% loss)
Or you could take one early and let the other run to the NRA date.

[RobertT]

A few points I'd like to add:

The Pensions Bill isn't law yet and the new RM CDC scheme doesn't exist at the moment, so we can't be 100% sure what it will look like and the exact rules it will have.
But the basic info of what we can expect can be found in the link I provided up-thread, and in the 4 pillars agreement: https://www.cwu.org/wp-content/uploads/ ... ow-res.pdf

A more in depth version is in the Anticipated Design Booklet: viewtopic.php?f=27&t=88953

But the CDC pension itself is just an aim of 1/80 of pensionable pay per year of membership, increasing by RPI each year. What you actually get will depend on the returns of the investments held within the scheme, which could mean a higher or lower amount.

When taking your pension before NRA you will usually face a 5% reduction per year. But you also have to consider the actual amounts of money involved.
Personally I would take a much bigger hit in money terms if I took my NRA60 at 55, than if I took my NRA65 at 60, due to having more service before 2010 and being in the final salary scheme until 2008.

[stephen500]

A few points I'd like to add:

The Pensions Bill isn't law yet and the new RM CDC scheme doesn't exist at the moment, so we can't be 100% sure what it will look like and the exact rules it will have.
But the basic info of what we can expect can be found in the link I provided up-thread, and in the 4 pillars agreement: https://www.cwu.org/wp-content/uploads/ ... ow-res.pdf

A more in depth version is in the Anticipated Design Booklet: viewtopic.php?f=27&t=88953

But the CDC pension itself is just an aim of 1/80 of pensionable pay per year of membership, increasing by RPI each year. What you actually get will depend on the returns of the investments held within the scheme, which could mean a higher or lower amount.

When taking your pension before NRA you will usually face a 5% reduction per year. But you also have to consider the actual amounts of money involved.
Personally I would take a much bigger hit in money terms if I took my NRA60 at 55, than if I took my NRA65 at 60, due to having more service before 2010 and being in the final salary scheme until 2008.

Am I also right Robert T that the proposed CDC scheme can go down in payment?
I wonder if it could go up in payment??

[RobertT]

Am I also right Robert T that the proposed CDC scheme can go down in payment?
I wonder if it could go up in payment??

The aim is that it will increase by inflation each year. But in practice it could and and probably will go up in some years and down in others.

That will affect all members whether they're employed, deferred or pensioners.

[stephen500]

Am I also right Robert T that the proposed CDC scheme can go down in payment?
I wonder if it could go up in payment??

The aim is that it will increase by inflation each year. But in practice it could and and probably will go up in some years and down in others.

That will affect all members whether they're employed, deferred or pensioners.

So if you are getting a pension of say £100 per month from the CDC scheme, it could become £95 or £105?
Would that change be for the year?
You may not know the answer, but some some thoughts.
I wonder what is the maxium variation per year.
I know in the scheme, they talk about spreading any retification over 3 years.
So I wonder if any rises or reductions would be for a similar period?

[RobertT]

So if you are getting a pension of say £100 per month from the CDC scheme, it could become £95 or £105?

Yes.

Would that change be for the year?

Initially yes, but it could be longer if the investments don't bounce back.

You may not know the answer, but some some thoughts.
I wonder what is the maxium variation per year.

That would depend on investment returns. If the total fund drops below the required amount to pay everyone's pension, members will see a reduction. The amount of reduction will depend on how much the drop is.

I know in the scheme, they talk about spreading any retification over 3 years.
So I wonder if any rises or reductions would be for a similar period?

Reductions could potentially be for as long as it takes to get the scheme back to level funding, but I believe the aim is within 3 years.

The whole point of CDC is that there isn't supposed to be either a deficit or a surplus. So if the value of the investments go down, so do our pensions. But if the value increases, then our pensions increase too.

Everyone's pension will be a pro rata amount based on their pensionable pay, service and the value of the scheme as a whole.

The planned methods to be used when a reduction and /or an increase applies can be found in the CDC Anticipated Design: viewtopic.php?f=27&t=88953