RMPP final pension options

[RobertT]

With total service of 13 years and 8 months, that presumably means onejontwo joined RM in the summer of 2007?

Therefore on the face of it, he should have 2.5 years or so worth of NRA60 pension which he is already taking.

£360 per year doesn't sound very much, so maybe he didn't join the pension scheme straight away or he worked part time, and he also took it before NRA. All of which will reduce the amount of entitlement.

He should have a total of 8 years worth of NRA65, but the figures quoted only relate to RMPP benefits and so include just 2012-2018 pension benefits, plus the DBCBS. They have also been reduced for early payment.

He will presumably have another 2 years(2010-2012) worth of NRA65 from the RMSPS aswell.

[onejontwo]

With total service of 13 years and 8 months, that presumably means onejontwo joined RM in the summer of 2007?

Therefore on the face of it, he should have 2.5 years or so worth of NRA60 pension which he is already taking.

£360 per year doesn't sound very much, so maybe he didn't join the pension scheme straight away or he worked part time, and he also took it before NRA. All of which will reduce the amount of entitlement.

He should have a total of 8 years worth of NRA65, but the figures quoted only relate to RMPP benefits and so include just 2012-2018 pension benefits, plus the DBCBS. They have also been reduced for early payment.

He will presumably have another 2 years(2010-2012) worth of NRA65 from the RMSPS aswell.

Yes, "Current value of preserved benefits - £615.97 which includes a pension supplement of - £110.36
I did initially start on 28 hours then after some time 30 hours then around 5 or 6 years ago 35 hours.

[stephen500]

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.

I just spend over a hour typing my response, but then chat logged me out and I lost my reply to you.
What is missing from your figures is your total cash balance fund,
Your figures are presented in a slightly different format to mine and with an extra choice for the standard benefit.
Bear in mind that some of the choices you may make can take 20 years of payments to correct.
In other words if you choose the standard pension v option 2A, the loss of main tax free allowance would take you 20 years of pension payments to make up (leaving out inflation increases of your pension)
Option 2 should mean that your cash balance fund will be available as either an unfunded scheme, where 25% is tax free and 75% is taxed as cash, or as an annunity or the choice to transfer to another scheme.
Option 2A gives a higher reduced pension than option 2 but with less main lump sum.
But you should have an excess cash balance amount to come, with 25% being tax free and 75% being taxed.
On paper the main tax free allowance of option 2A added to the tax free amount of the cash balance scheme paid with the main benefits, adds up to more than the lump sum offered in option 2. But without adding the cash balance amount to option 2, you cannot make a comparison yet.
For my options option 2A meant I lost out on some of my available lump sum for option 2 and it will take me 16 years to get my money back in pension payments with 2A.
I am still happy with my choice of 2A (this may not be the exact same option as shown on yours ie your 2A might be different to my 2A)
If you chose the option with an excess cash balance to come 2A. You will be given a provisonal figure, which will be revised within 12 weeks of payment.
That total cash balance figure will be reduced by what you will have taken in option 2A and 25% of the rest will be tax free and the rest 75% taxed.
With other options, that cash balance fund, can be transfered or taken as an annunity.
As your format is slightly different to mine, it makes me slightly uneasy giving my opinion.
But I hope it gives you some information.
Personally their is no way I would take your option 1, as it would take me twenty years to get my money back from the lost lump sum.
I suppose it depends on how long you think you will live.
But I don't think I have twenty years in me!

RMPP pension with DBCBS 4.jpg

new final DBCBS RMPP 13 1 2021.jpg

RMPP pension with DBCBS 1.jpg

RMPP pension with DBCBS 2.jpg

[freespeech]

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.

I just spend over a hour typing my response, but then chat logged me out and I lost my reply to you.
What is missing from your figures is your total cash balance fund,
Your figures are presented in a slightly different format to mine and with an extra choice for the standard benefit.
Bear in mind that some of the choices you may make can take 20 years of payments to correct.
In other words if you choose the standard pension v option 2A, the loss of main tax free allowance would take you 20 years of pension payments to make up (leaving out inflation increases of your pension)
Option 2 should mean that your cash balance fund will be available as either an unfunded scheme, where 25% is tax free and 75% is taxed as cash, or as an annunity or the choice to transfer to another scheme.
Option 2A gives a higher reduced pension than option 2 but with less main lump sum.
But you should have an excess cash balance amount to come, with 25% being tax free and 75% being taxed.
On paper the main tax free allowance of option 2A added to the tax free amount of the cash balance scheme paid with the main benefits, adds up to more than the lump sum offered in option 2. But without adding the cash balance amount to option 2, you cannot make a comparison yet.
For my options option 2A meant I lost out on some of my available lump sum for option 2 and it will take me 16 years to get my money back in pension payments with 2A.
I am still happy with my choice of 2A (this may not be the exact same option as shown on yours ie your 2A might be different to my 2A)
If you chose the option with an excess cash balance to come 2A. You will be given a provisonal figure, which will be revised within 12 weeks of payment.
That total cash balance figure will be reduced by what you will have taken in option 2A and 25% of the rest will be tax free and the rest 75% taxed.
With other options, that cash balance fund, can be transfered or taken as an annunity.
As your format is slightly different to mine, it makes me slightly uneasy giving my opinion.
But I hope it gives you some information.
Personally their is no way I would take your option 1, as it would take me twenty years to get my money back from the lost lump sum.
I suppose it depends on how long you think you will live.
But I don't think I have twenty years in me!
RMPP pension with DBCBS 4.jpg
new final DBCBS RMPP 13 1 2021.jpg
RMPP pension with DBCBS 1.jpg
RMPP pension with DBCBS 2.jpg

When you get the detailed options forms like this do they also include the AVC's or is that separate again?

[stephen500]

I had no AVCs but people I know who did, did receive them with their options and I have seen them.

[freespeech]

I had no AVCs but people I know who did, did receive them with their options and I have seen them.

Thanks.

[onejontwo]

I have just added this info about the cash balance fund if it helps, but basically I have decided to go for the biggest lump sum and either the small or middle size annual pension. So the way I see it is either
2a...which equates to £1582 per year + £1253 tax free cash + £10357 tax free cash balance fund which equals £11610 lump sum.
or
2....which equates to £1205 per year + £9092 tax free cash + £10357 (which is 25% tax free and the remaining 75% taxed so roughly 25% of £10000 = £2500 tax free, which leaves £7500 taxed at 20% = £1500. £7500 - £1500 = £6000 + £2500 tax free sum =£8500.
so £1205 per year + £9092 + £8500 = £17,592.
This appears to produce the biggest lump sum albeit the smallest annual pension and even though I pay tax on the lump sum it seems the best option for the biggest lump sum.

[stephen500]

I have just added this info about the cash balance fund if it helps, but basically I have decided to go for the biggest lump sum and either the small or middle size annual pension. So the way I see it is either
2a...which equates to £1582 per year + £1253 tax free cash + £10357 tax free cash balance fund which equals £11610 lump sum.
or
2....which equates to £1205 per year + £9092 tax free cash + £10357 (which is 25% tax free and the remaining 75% taxed so roughly 25% of £10000 = £2500 tax free, which leaves £7500 taxed at 20% = £1500. £7500 - £1500 = £6000 + £2500 tax free sum =£8500.
so £1205 per year + £9092 + £8500 = £17,592.
This appears to produce the biggest lump sum albeit the smallest annual pension and even though I pay tax on the lump sum it seems the best option for the biggest lump sum.

You will need to check this.
But I think you are wrong with assuming option 2 cash balance fund is taxed at all.
To me this is £10357 is completely tax free and any further excess cash balance you would have on top would be 25% tax free and 75% of that taxed.Unless this is the whole of your cash balance.
So check first and ask is this £10357 my total cash balance or am I due on top an "excess cash balance and if there is an excess for which options can I choose this (if I want to do so)" (ring RMPP and ask)
If I am correct. Then you can re do your calculations for both options.
Remember also, that once you take cash it does not increase any more. I took my option 2A (slightly different to yours though)
Ring RMPP and try and check what I have said about excess cash balance and if you are due any and that would be 25% tax free and 75% taxed.
Bear in mind this form is set out differently to mine and I was section B.
I may be wrong, but it does not hurt to check.

[onejontwo]

I have just added this info about the cash balance fund if it helps, but basically I have decided to go for the biggest lump sum and either the small or middle size annual pension. So the way I see it is either
2a...which equates to £1582 per year + £1253 tax free cash + £10357 tax free cash balance fund which equals £11610 lump sum.
or
2....which equates to £1205 per year + £9092 tax free cash + £10357 (which is 25% tax free and the remaining 75% taxed so roughly 25% of £10000 = £2500 tax free, which leaves £7500 taxed at 20% = £1500. £7500 - £1500 = £6000 + £2500 tax free sum =£8500.
so £1205 per year + £9092 + £8500 = £17,592.
This appears to produce the biggest lump sum albeit the smallest annual pension and even though I pay tax on the lump sum it seems the best option for the biggest lump sum.

You will need to check this.
But I think you are wrong with assuming option 2 cash balance fund is taxed at all.
To me this is £10357 is completely tax free and any further excess cash balance you would have on top would be 25% tax free and 75% of that taxed.Unless this is the whole of your cash balance.
So check first and ask is this £10357 my total cash balance or am I due on top an "excess cash balance" (ring RMPP and ask)
If I am correct. Then you can re do your calculations for both options.
I did ring RMPP today regarding my cash balance fund and they did say refer to the "Reduced age 65 option form "and I would be taxed 25% tax free and 75% on the remainder. They never mentioned an "excess cash balance" (which even I do not know what it is).
Remember also, that once you take cash it does not increase any more. I took my option 2A (slightly different to yours though)
Ring RMPP and try and check what I have said about excess cash balance and if you are due any and that would be 25% tax free and 75% taxed.
Bear in mind this form is set out differently to mine and I was section B.
I may be wrong, but it does not hurt to check.

[onejontwo]

I have just added this info about the cash balance fund if it helps, but basically I have decided to go for the biggest lump sum and either the small or middle size annual pension. So the way I see it is either
2a...which equates to £1582 per year + £1253 tax free cash + £10357 tax free cash balance fund which equals £11610 lump sum.
or
2....which equates to £1205 per year + £9092 tax free cash + £10357 (which is 25% tax free and the remaining 75% taxed so roughly 25% of £10000 = £2500 tax free, which leaves £7500 taxed at 20% = £1500. £7500 - £1500 = £6000 + £2500 tax free sum =£8500.
so £1205 per year + £9092 + £8500 = £17,592.
This appears to produce the biggest lump sum albeit the smallest annual pension and even though I pay tax on the lump sum it seems the best option for the biggest lump sum.

You will need to check this.
But I think you are wrong with assuming option 2 cash balance fund is taxed at all.
To me this is £10357 is completely tax free and any further excess cash balance you would have on top would be 25% tax free and 75% of that taxed.Unless this is the whole of your cash balance.
So check first and ask is this £10357 my total cash balance or am I due on top an "excess cash balance" (ring RMPP and ask)
If I am correct. Then you can re do your calculations for both options.
Remember also, that once you take cash it does not increase any more. I took my option 2A (slightly different to yours though)
Ring RMPP and try and check what I have said about excess cash balance and if you are due any and that would be 25% tax free and 75% taxed.
Bear in mind this form is set out differently to mine and I was section B.
I may be wrong, but it does not hurt to check.

I rang RMPP today to enquire about my cash balance fund and they told me to refer to the "Reduced age 65 option form" in which it states that I would be taxed at 25% tax free and 75% taxed on the remainder. They never mentioned excess cash balance (even I do not know what it is).

[RobertT]

I rang RMPP today to enquire about my cash balance fund and they told me to refer to the "Reduced age 65 option form" in which it states that I would be taxed at 25% tax free and 75% taxed on the remainder. They never mentioned excess cash balance (even I do not know what it is).

If there is any Cash Balance left over after taking the maximum 25% tax free lump sum, the excess is paid out as a separate lump sum with the first 25% of that being tax free and the remainder being taxed.

It seems to me that the forms have changed slightly since Stephen took his pension, and things are now set out and named a little differently.

[stephen500]

I rang RMPP today to enquire about my cash balance fund and they told me to refer to the "Reduced age 65 option form" in which it states that I would be taxed at 25% tax free and 75% taxed on the remainder. They never mentioned excess cash balance (even I do not know what it is).

If there is any Cash Balance left over after taking the maximum 25% tax free lump sum, the excess is paid out as a separate lump sum with the first 25% of that being tax free and the remainder being taxed.

It seems to me that the forms have changed slightly since Stephen took his pension, and things are now set out and named a little differently.

But they haven't told you yet IF there is a remainder. Ie an excess cash balance fund over and above your £10K.
Also as I said, you could check on the £10K as well, as I am confident that is tax free.
I don't like these new forms, I think they are worse than mine. I think they are going backwards.

[onejontwo]

So if I go for option 2 (which by my maths seems to be the biggest lump sum and the smallest annual pension) the possibility of the lump sum being tax free and also the possibility of an excess cash balance fund will be a nice bonus. If this is not the case and I don't receive an excess cash balance fund and have to pay income tax on the lump sum, then I still believe this is the best choice regarding the biggest lump sum

[arsenalbob]

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.

I’d go for 2A all day long. I turned 65 last week and it took them three attempts to send me the correct options forms. I’d been paying £20 per week into an AVC fund and £29 per week pension contributions so this was my first week of paying no contributions. I expected to be around £49 better off but no, only £33. Something to do with tax and NI

[RobertT]

I’d been paying £20 per week into an AVC fund and £29 per week pension contributions so this was my first week of paying no contributions. I expected to be around £49 better off but no, only £33. Something to do with tax and NI

The contributions on your payslip are the gross amounts that are being paid into your pension.
But your RM pension contributions benefit from tax relief and salary sacrifice(PSE).

So for each £1 that goes in, 20p gets taken off your income tax bill(tax relief) and 12p taken off your NIC's(PSE).
Meaning each £1 gross contribution only actually costs you 68p, with the government paying the other 32p.

When you stop paying pension contributions, your take home pay will only increase by the net amount – or 68p for every £1 gross.
Your figures of £49 and £33 sound right to me.