RMSPS / RMPP age 60

[Patrick301]

I know its best to take your nra 60 benefits at age 60 and your nra 65 benefits at age 65
I think RMSPS pays a big lump sum and RMPP pays out a small lump sum
So as far as i know nearly everyone takes the big RMSPS nra 60 lump sum when they reach 60 and leave the 65 benefits in till they reach 65
But what do they do with the small RMPP lump sum
Is it best to not touch that at all or take the nra 60 RMPP small lump sum as well as the nra 60 RMSPS big lump sum

Catogory c

[RobertT]

You haven't got the choice!
It's a case of you have to take all of your NRA60 benefits at the same time.
Some of those benefits are paid out by the RMSPS and some by the RMPP.

The same applies to your NRA65 benefits.

Most section C members probably do take the maximum lump sum and therefore give up some pension in doing so, assuming they haven't got AVC's to provide that lump sum instead. But some do prefer the bigger pension.

There's also plenty willing to take their pensions early, many from age 55, giving up 5% per year.

EDIT:

I may have misinterpreted what you posted?

Do you actually mean what do people do with the NRA65 lump sum?

If so, you will have 2 choices:

Use the DBCBS to fund all or most of the NRA65 lump sum with any remainder reducing your pension accordingly; or

Take the max 25% lump sum from the pension and therefore reduce your income, and also take the DBCBS, of which 25% would be tax free and the rest classed as income and taxed under normal PAYE rules.

[freespeech]

When we get our statements through in the next 6-8 weeks I expect my DBCBS fund to be bigger than the max NRA65 lump sum. Given we are already half way through this year that suggests my 2022 statements will show a massive overfunding - perhaps even double. I expect to take my NRA60 and 65 pensions separately so I do wonder whether I would lose out compared to taking them together when some of the excess DBCBS fund could be used to fund the LS for NRA60 (because the majority has already topped out NRA65 LS).

[tractorboy2]

I was given the option to use some of the BDCBS to fund the RMPP NRA60 lump sum , and took that option.

[RobertT]

The DBCBS is specifically 'attached' to RMPP benefits, so that includes pension accrued between 2012-2018.
As the RMSPS are responsible for paying pre 2012 benefits, the DBCBS is therefore only attached to 75% of your NRA65 pension, assuming you have the full allocation of 8 years(2010-2018).

The original plan was for the DBCBS to be attached to all our pensions, but RMPP needed Cabinet Office approval, which was denied.

Also, the RMPP are responsible for paying some RMSPS benefits that continued to build up after 2012 due to inflationary increases.
As I understand it, some DBCBS could therefore be offset against that amount when you take your NRA60 benefits.

I don't think taking your NRA60 and NRA65 separately has any bearing on how they are worked out.

[Captain Scarlet]

My question to Robert if I may. When I retire at 60 (2028) I will have 40yrs service having started p/t in June 1987 then f/t Nov 1987. This would put me in section c of the scheme. I have a small AVC( Bonusplan I think) and I wonder if increasing this for duration until 60 would be worthwhile? Also I am looking to take lump sum and smaller pension at 60 but will my 65 sit waiting until I hit that age obviously as I will no longer be paying into the pension? Will I aso be able to take AVC money as a lump sum? Thanks in advance.

[RobertT]

AVC's are usually used to fund some or all of the tax free lump sum when taking your benefits. Doing that will mean not giving up quite so much pension to get that lump sum.
It is possible to take max lump sum by commuting some pension and AVC's, but you may end up losing a chunk in tax, depending on amounts involved.

You can't increase contributions into Bonusplan, but you can set up a Flexiplan aswell.
Details on the RMPP website: https://www.royalmailpensionplan.co.uk/ ... n-benefits

You may have heard there's a new pension scheme coming our way fairly soon – probably some time next year.
As it will be a totally separate scheme to the current one, we don't yet know whether we will be able to continue paying into the current AVC arrangements.
Personally I don't think we will, but there's been nothing confirmed yet.

Your NRA65 benefits will continue to grow with inflation until you take them. The DBCBS can be used to fund the tax free lump sum when taking NRA65 benefits.