I received a letter and booklet in March asking if i would like to join the Defined Benefit Cash Balance Scheme. Ive read through it all a couple of times but im finding it quite hard to get my head around it all, and whether i should make the switch or not.
I know that personal circumstances make it difficult to give advice about stuff like this but just wondering if theres any obvious reasons not to join that im missing.
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Should i join the DBCBS
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RobertT
- EX ROYAL MAIL
- Posts: 6645
- Joined: 09 Sep 2007, 14:26
- Gender: Male
Re: Should i join the DBCBS
I assume you've been in the RMDCP with Scottish Widows(formerly Zurich) for around 4-5 years?
With the RMDCP:
RM pay contributions of a maximum of 10% of basic pay, plus if you're part time, any OT which takes your hours up to full time(38).
No allowances are included in your pensionable pay.
You have control over where your money is invested, from the 12? choices available.
Your money will fluctuate in value in line with the investments you've chosen.
There is no Normal Retirement Age, other than the legal minimum, currently 55.
With the DBCBS:
RM pay contributions of 13.6% of pensionable pay, which is only basic(no OT for part timers) plus pensionable allowances.
Your actual basic pay has the Lower Earnings Deduction subtracted to make your pensionable pay.
The sum total of the money going in is guaranteed, with the additional of annual bonuses awarded at the discrepancy of RM. The first 2 bonuses were 3.7% and 1.7%.
You have no control over where the money is invested.
The NRA is 65, but the plan guide says you can take it earlier, but with a reduction.
Personally I would say the main things to consider are:
Are you part time and therefore potentially getting a better deal in the RMDCP.
How and when you want to access your pension savings.
And also bear in mind that a new type of pension scheme(CDC) is due to be implemented relatively soon(probably within the next 12 months) which will supersede all current RM pension schemes.
Personally and obviously without knowing all the details, I would probably stay in the RMDCP, but that is based on my situation.
Ultimately it's a decision only you can make.
Make sure you compare the two schemes properly and come to a decision that best suits you. The respective plan guides are available here:
RMDCP: https://www.scottishwidows.co.uk/save/royalmaildcplan/
DBCBS(section F): https://www.royalmailpensionplan.co.uk/ ... ia-library
With the RMDCP:
RM pay contributions of a maximum of 10% of basic pay, plus if you're part time, any OT which takes your hours up to full time(38).
No allowances are included in your pensionable pay.
You have control over where your money is invested, from the 12? choices available.
Your money will fluctuate in value in line with the investments you've chosen.
There is no Normal Retirement Age, other than the legal minimum, currently 55.
With the DBCBS:
RM pay contributions of 13.6% of pensionable pay, which is only basic(no OT for part timers) plus pensionable allowances.
Your actual basic pay has the Lower Earnings Deduction subtracted to make your pensionable pay.
The sum total of the money going in is guaranteed, with the additional of annual bonuses awarded at the discrepancy of RM. The first 2 bonuses were 3.7% and 1.7%.
You have no control over where the money is invested.
The NRA is 65, but the plan guide says you can take it earlier, but with a reduction.
Personally I would say the main things to consider are:
Are you part time and therefore potentially getting a better deal in the RMDCP.
How and when you want to access your pension savings.
And also bear in mind that a new type of pension scheme(CDC) is due to be implemented relatively soon(probably within the next 12 months) which will supersede all current RM pension schemes.
Personally and obviously without knowing all the details, I would probably stay in the RMDCP, but that is based on my situation.
Ultimately it's a decision only you can make.
Make sure you compare the two schemes properly and come to a decision that best suits you. The respective plan guides are available here:
RMDCP: https://www.scottishwidows.co.uk/save/royalmaildcplan/
DBCBS(section F): https://www.royalmailpensionplan.co.uk/ ... ia-library
Links to all RM pension related websites are here
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mjd24
- Posts: 1402
- Joined: 11 May 2008, 18:48
Re: Should i join the DBCBS
Thankyou Robert, very helpful and much appreciated.