NR 60 Supplement

[aled34]

Hello everyone,
My last NR 60 statement showed a section C supplement value of £1126. If I was to retire in a few years at exactly age 60 would this go into my pension pot? For example; 20 x £1126= £22,520 ( creating a bigger total pot value, thus also generating a bigger tax free lump sum) or is it just the case of getting £1126 a year extra until state pension age and not being included in the pot which would then be £1126 x 7 years =£7882. Maths don’t make sense! Not sure what they were thinking of when they created the section C pension, (apart from shafting their loyal workers). I can’t wait to go at 60(knackered!)but part of me feels like carrying on just so I don’t have to negotiate the crazy world of Royal Mail pensions.

[RobertT]

My understanding as to whether the supplement is included when working out your 'total pot value', is determined by your employment status at the time.

The Guide to Benefits, says the supplement is included in the calculation. But contributors to this forum have taken their pensions while still working for RM, and it hasn't been included.

There does seem to be some confusion. So I can only suggest you contact the pensions people at the time (RM's PSC & Capita) to ensure they know you're leaving.

If it is included, then that would suggest potentially £5,630 more in tax free cash, than if it isn't!
Plus you still get it until SPA.

RM pensions are stupidly crazy, but they have to be negotiated sooner or later!

[aled34]

Thanks for you help. I will have to get the ball rolling at least 4 or 5 months before I reach 60 and make sure the PSC and Capita are communicating with each other!

[tractorboy2]

Thanks for you help. I will have to get the ball rolling at least 4 or 5 months before I reach 60 and make sure the PSC and Capita are communicating with each other!

I thought information was automatically sent around 6 months before NRA60 is due !!.

[RobertT]

I thought information was automatically sent around 6 months before NRA60 is due !!.

Yes, it should be!

[heapsy]

My understanding as to whether the supplement is included when working out your 'total pot value', is determined by your employment status at the time.

The Guide to Benefits, says the supplement is included in the calculation. But contributors to this forum have taken their pensions while still working for RM, and it hasn't been included.

There does seem to be some confusion. So I can only suggest you contact the pensions people at the time (RM's PSC & Capita) to ensure they know you're leaving.

If it is included, then that would suggest potentially £5,630 more in tax free cash, than if it isn't!
Plus you still get it until SPA.

RM pensions are stupidly crazy, but they have to be negotiated sooner or later!

I contacted pensions about this today. I'm looking at retiring at 60, so wanted a better idea myself. I was told that you don't get the supplement if you draw your NRA60 and work on. This, I think, was understood by most. The issue of whether the supplement was included baffled me, but I was told that it is a separate matter, so isn't included. Your pension, including your annual increase are the figures you use to calculate the 25%. So, in my case, £5,904.25 + pension increase amount £1,597.17=£7,501.42. Multiply by 20 gives me £150,028.40. With around £31,500 in AVCs, I'm about £18,500 short of 25%, unless I took it from the pot, although future increases to the pension increase amount, and further AVC payments will close this gap. Hope it helps anyone out there.

[RobertT]

I contacted pensions about this today. I'm looking at retiring at 60, so wanted a better idea myself. I was told that you don't get the supplement if you draw your NRA60 and work on. This, I think, was understood by most. The issue of whether the supplement was included baffled me, but I was told that it is a separate matter, so isn't included.

What baffles me about this, is the inconsistent answers we get for the same questions!

You've been told the supplement isn't included when working out the maximum lump sum, yet the 'guide to benefits' says it is.
There are many other similar examples.

Surely it should be a black or white thing, but instead we get a distinct shade of grey!

Your pension, including your annual increase are the figures you use to calculate the 25%. So, in my case, £5,904.25 + pension increase amount £1,597.17=£7,501.42. Multiply by 20 gives me £150,028.40. With around £31,500 in AVCs, I'm about £18,500 short of 25%, unless I took it from the pot, although future increases to the pension increase amount, and further AVC payments will close this gap. Hope it helps anyone out there.

Yes, the easiest way to work out the maximum tax free lump sum is to assume the pension multiplied by 20 equals 75% of your NRA60 pot. Meaning the other 25% is the lump sum.

But if your AVC's were to be over 25% when taking your NRA60, you can defer the remainder to take with your NRA65.

In my case(section C), the DBCBS amount will probably be less than 25%(based on 4 years of contributions), therefore there would be some scope to fund a bigger tax free lump sum at 65. Although for me probably no more than another £5-6k.
As it is, I already have over 25% and will end up paying some tax.