RMPP final pension options

[onejontwo]

I've finally received my RMPP pension options, and having looked over the numbers I must choose one of the options. To me, being a novice on the pension scheme, I am tempted by option 2a as that seems to produce the biggest lump sum and a relatively decent pension income. However being a novice I bow down to the vast help and experience I have received on this forum in the past. So any help and guidance from the more experienced and knowledgeable members on here would be much appreciated.

[RobertT]

It depends what you aims are!

If you want the maximum lump sum, then 2A would seem like the best choice, but if you want that slightly bigger index linked income for life then it would be 1A.
The difference between the two and the difference between options 1 and 2 would suggest a lump sum commutation rate of roughly 1:20.

I have no experience of these forms as I'm not old enough to take my pension yet and they don't get uploaded onto here too often.
But as a matter of interest, what does it say about your Cash Balance if you don't take it via options 1 & 2?

I assume you would have the option, at a later date, to either take it as taxable cash or transfer it to another pension arrangement?
In which case, you would have to factor that into your calculations and therefore your choice might be different?

[onejontwo]

This is the only other information I have received regarding the cash balance fund. I know that circumstances can be vastly different for each individual, but basically a lump sum would be nice but not a necessity so I'm looking for the most simple tax efficient way of getting the most money out of the pension pot, but I know that a lot of factors come into play ie. health, future plans, savings etc.

[NorthernBoy]

Assuming you are paying no tax on your pension income then the difference if £36.50 a month or a 9k lump sum now. (Based on the max lump sum)

Only you can decide which is better for you, but as mentioned it would tax you roughly 20 years to get the lump sum back from income (slightly less with increases). You need to work out what your income requirement is for retirement and how much income you have coming in from all your pensions.

Personally I would take the 9k lump sum and have a few nice holidays, but that’s just me.

[onejontwo]

Assuming you are paying no tax on your pension income then the difference if £36.50 a month or a 9k lump sum now. (Based on the max lump sum)

Only you can decide which is better for you, but as mentioned it would tax you roughly 20 years to get the lump sum back from income (slightly less with increases). You need to work out what your income requirement is for retirement and how much income you have coming in from all your pensions.

Personally I would take the 9k lump sum and have a few nice holidays, but that’s just me.

See now this is where I'm confused! You said take the 9k now and have a few holidays, wouldn't it be more beneficial to take 2a ie. a bigger annual pension, and 10k + £1253? or am I missing something?

[NorthernBoy]

My mistake I thought you get the cash balance lump sum as well on the lower pension but you don’t, as such I would take 2a.

[onejontwo]

Just a thought, when it states in option 1 and 2 cash balance fund "none", does this mean that the cash balance fund is zero and therefore nothing to claim or does it mean that it is still available to claim at a later date?

[RobertT]

Just a thought, when it states in option 1 and 2 cash balance fund "none", does this mean that the cash balance fund is zero and therefore nothing to claim or does it mean that it is still available to claim at a later date?

Which is essentially the same question as I asked upthread, which you answered by posting the second attachment.

[onejontwo]

So to clarify, is the cash balance fund ALWAYS available but in quotes 1 and 2 available at a later date?

[freespeech]

So to clarify, is the cash balance fund ALWAYS available but in quotes 1 and 2 available at a later date?

Yes, the cash balance is part of your pension contribution. It was designed to provide a lump sum alternative to NRA65 (I mean it can replace the LS and you still get the higher pension without the cash option).

[NWpostie]

How long have you been in Royal Mail ?

The amount per year don't seem much with age 60+65 after taking lump sum option 2a leaving you with just under £3k a year plus £10k lump sum, have I got that right?

[onejontwo]

How long have you been in Royal Mail ?

The amount per year don't seem much with age 60+65 after taking lump sum option 2a leaving you with just under £3k a year plus £10k lump sum, have I got that right?

I've been with RM for 13 years 8 months and have been taking my age 60 pension for some time. 3k a year? Where did you get that number from? I'm sure the £1253.66 is a one off cash payment and not added to the annual income to make it just under £3k . So the annual income is £1582.87.

[NWpostie]

How long have you been in Royal Mail ?

The amount per year don't seem much with age 60+65 after taking lump sum option 2a leaving you with just under £3k a year plus £10k lump sum, have I got that right?

I've been with RM for 13 years 8 months and have been taking my age 60 pension for some time. 3k a year? Where did you get that number from? I'm sure the £1253.66 is a one off cash payment and not added to the annual income to make it just under £3k . So the annual income is £1582.87.

Ah I didn't realise you already have taken your age 60 benefit, hence my confusion for a minute.

Out of interest if you don't mind me asking, how much are you getting a year on your age 60 pension ? So I have some idea of the figures in relation to option 2a.

[onejontwo]

How long have you been in Royal Mail ?

The amount per year don't seem much with age 60+65 after taking lump sum option 2a leaving you with just under £3k a year plus £10k lump sum, have I got that right?

I've been with RM for 13 years 8 months and have been taking my age 60 pension for some time. 3k a year? Where did you get that number from? I'm sure the £1253.66 is a one off cash payment and not added to the annual income to make it just under £3k . So the annual income is £1582.87.

Ah I didn't realise you already have taken your age 60 benefit, hence my confusion for a minute.

Out of interest if you don't mind me asking, how much are you getting a year on your age 60 pension ? So I have some idea of the figures in relation to option 2a.

The grand total of one pound a day, or £30 per month.

[Hawkey99]

I assume you are part time doing a few days per week ?