DBCBS taking early reduction....

[Hawkey99]

Do we know if there is a reduction for taking this early or is it basically you get back what you have paid in plus yearly bonuses alongside your NRA 65.....

Many Thanks

[stephen500]

Do we know if there is a reduction for taking this early or is it basically you get back what you have paid in plus yearly bonuses alongside your NRA 65.....

Many Thanks

I think mine was reduced by around 8% for taking it 5 years early (only the cash balance) My NRA 65 was reduced by around 25%

[Hawkey99]

Hi Stephen,

Reduced by 8% from what.....

Did you receive less than you had paid in since it started ?

[RobertT]

Hi Stephen,

Reduced by 8% from what.....

Did you receive less than you had paid in since it started ?

All the literature on the RMPP website and in the plan guide, says the DBCBS will be reduced if taken before 65.

If Stephens total of 8% for taking it just over 5 years early is correct, that would suggest a reduction of around 1.6% per year.

We know for certain how much our Cash Balance funds are worth up to 31st March 2020 from the annual statement, which will soon be seeing a 1.7% increase, plus another years worth of contributions on top.
So it's not too difficult to work out fairly accurate amounts for current total values and also any possible early payment reduction.

Remember: the annual increases are added 1 year in arrears. So the first increase of 3.7% announced roughly 1 year ago, only applied to the first year(2018/19) and this years 1.7% will apply to years 1 and 2(2018-20).

[Hawkey99]

Thanks Robert,

Just can’t get my head around why if this is a cash lump sum that it would be reduced...

Oh well....It is what it is....

[Hawkey99]

So if I want to take it at 59 I assume that 8 years early...

8 x 1.6%= 10.8% reduction....

Is that right......??

[RobertT]

The DBCBS is part of the RMPP and is linked to NRA65 benefits and so also has an NRA of 65.

The 1.6% per year was a suggestion based on Stephens total 8% reduction for taking his NRA65 5 years early.
I don't think we know the definitive answer to how much the DBCBS is reduced by when taking it early. I don't know anyway!

[celtic1967]

When I left in 2019 under IHR I was given my pension figures and was told that there would be no reduction to the Cash Balance figure if I took it at at NRA60. Just saying what I was told.

[freespeech]

When I left in 2019 under IHR I was given my pension figures and was told that there would be no reduction to the Cash Balance figure if I took it at at NRA60. Just saying what I was told.

Sometimes IHR ensures pension payments are protected against reduction.

[Hawkey99]

This is just another ridiculous example when we don't even know what are pensions are worth......

There must be a formula.....

just crazy......

[stephen500]

Hi Stephen,

Reduced by 8% from what.....

Did you receive less than you had paid in since it started ?

Even that may not be correct, with my revised excess DBCBS at 12 weeks, I may not have lost any thing at all.
Here is my break down
2018 £5700
2019 £5700
2020 £3441 (£5900 divided by 12 x 7 months - Apr to Oct 20)
Total DBCBS due £14841 according to my calculations of 19.6% of my pensionable pay.
with My DBCBS- provisional amount was £13776.81 that would have been a loss of 7.5% (for five years and two months)
However, once my DBCBS (cash balance) was revised at 12 weeks after my first payment,
My DBCBS was changed to £15849.66.

new final DBCBS RMPP 13 1 2021.jpg

Which meant I lost nothing in pure cash terms for what I put in.
But one thing I do not know, is if I have lost some money from bonuses that may have been due to be added to my DBCBS.
Robert T may know this.
So if Robert T can add bonuses that were due to my calculations of £14841, my final figure before reduction may have been higher than £15849.66
So I may have lost some thing. But what ever it was it was not 26% (five years and two months early)
This is for the cash balance only I am talking about.
I lost much more for the actual pension. I can't remember if it was 26%. But it was much higher.

[stephen500]

So if I want to take it at 59 I assume that 8 years early...

8 x 1.6%= 10.8% reduction....

Is that right......??

See my latest reply above this.
Btw that is not 8 years early as your Cash balance has an NRA date of 65.
It is the new scheme that is 67.

[stephen500]

When I left in 2019 under IHR I was given my pension figures and was told that there would be no reduction to the Cash Balance figure if I took it at at NRA60. Just saying what I was told.

That was the case and then they changed it, as the government wouldn't let them do it.

[RobertT]

Even that may not be correct, with my revised excess DBCBS at 12 weeks, I may not have lost any thing at all.
Here is my break down
2018 £5700
2019 £5700
2020 £3441 (£5900 divided by 12 x 7 months - Apr to Oct 20)

Total DBCBS due £14841 according to my calculations of 19.6% of my pensionable pay.
with My DBCBS- provisional amount was £13776.81 that would have been a loss of 7.5% (for five years and two months)

However, once my DBCBS (cash balance) was revised at 12 weeks after my first payment,
My DBCBS was changed to £15849.66.
new final DBCBS RMPP 13 1 2021.jpg
Which meant I lost nothing in pure cash terms for what I put in.
But one thing I do not know, is if I have lost some money from bonuses that may have been due to be added to my DBCBS.

Robert T may know this.
So if Robert T can add bonuses that were due to my calculations of £14841, my final figure before reduction may have been higher than £15849.66
So I may have lost some thing. But what ever it was it was not 26% (five years and two months early)
This is for the cash balance only I am talking about.
I lost much more for the actual pension. I can't remember if it was 26%. But it was much higher.

To be honest Stephen, your yearly DBCBS figures have always been estimates and not based on actual amounts.

The 2018/19 DBCBS amount will be on your 2019 annual statement – which received a 3.7% uplift on 1st April 2020.

As per the 2014 changes, our contributions increase by RPI each April, so the 2019/20 DBCBS figure will be more than the previous years.

Then you have a 'part year' until you left RM. I thought you actually left in December?

In my opinion you're estimates are short of the mark.

The annual increases are applied 1 year in arrears, so I assume this years bonus of 1.7%(applying to years 2018-20 and applied on 1st April 2021) won't have been included in your official figures. Although you could argue you should be entitled to a pro rata amount.

[stephen500]

Even that may not be correct, with my revised excess DBCBS at 12 weeks, I may not have lost any thing at all.
Here is my break down
2018 £5700
2019 £5700
2020 £3441 (£5900 divided by 12 x 7 months - Apr to Oct 20)

Total DBCBS due £14841 according to my calculations of 19.6% of my pensionable pay.
with My DBCBS- provisional amount was £13776.81 that would have been a loss of 7.5% (for five years and two months)

However, once my DBCBS (cash balance) was revised at 12 weeks after my first payment,
My DBCBS was changed to £15849.66.
new final DBCBS RMPP 13 1 2021.jpg
Which meant I lost nothing in pure cash terms for what I put in.
But one thing I do not know, is if I have lost some money from bonuses that may have been due to be added to my DBCBS.

Robert T may know this.
So if Robert T can add bonuses that were due to my calculations of £14841, my final figure before reduction may have been higher than £15849.66
So I may have lost some thing. But what ever it was it was not 26% (five years and two months early)
This is for the cash balance only I am talking about.
I lost much more for the actual pension. I can't remember if it was 26%. But it was much higher.

To be honest Stephen, your yearly DBCBS figures have always been estimates and not based on actual amounts.

The 2018/19 DBCBS amount will be on your 2019 annual statement – which received a 3.7% uplift on 1st April 2020.

As per the 2014 changes, our contributions increase by RPI each April, so the 2019/20 DBCBS figure will be more than the previous years.

Then you have a 'part year' until you left RM. I thought you actually left in December?

In my opinion you're estimates are short of the mark.

The annual increases are applied 1 year in arrears, so I assume this years bonus of 1.7%(applying to years 2018-20 and applied on 1st April 2021) won't have been included in your official figures. Although you could argue you should be entitled to a pro rata amount.

I know the £5724 is correct as it was on my illustration.
But my main point holds true, the loss for taking early the DBCBS is a lot less than the standard pension reductions for doing the same.

cash.jpg

So it was £5724 to Apr 2019
Our wages did not change the next year so the next year it was £5724 to Apr 2020.
The next and final year was a part year for me and my wages did increase as we had a pay rise and that is an estimate of £3441. (Apr to Oct 20) as I took my first pension lump sum payment on the 1st Nov 2020. (which is classed as my date of payment)