AVC

[streets97]

A question about the new pension scheme.

It says I will stop paying in AVC's, so can I move them to my private pension provider?

Should I leave them where they are?

[RobertT]

Payments into Flexiplan and Bonusplan will stop but the money you already have in those accounts can still be used to fund the tax free cash when you take your NRA60/65 benefits. So if you were planning on using them for that, then keep them where they are.

Generally speaking if you take them with your NRA60/65 they're more likely to be tax free, but if you transfer them, then only the first 25% is guaranteed to be tax free with the remainder being classed as income under normal PAYE rules, pending personal circumstances or course.

There will also be the opportunity to save more via the new scheme:

Could I pay in a different amount? You cannot pay in less than 6%, but there are two ways you could save more. 

Lump Sum Booster - You pay an extra 1% of your Pensionable Pay into the cash lump sum section of the Plan. Royal Mail pays in another 1%. This boosts your cash lump sum. We expect this boost to be 2.2% of your Pensionable Pay, but this could change. 

AVCs - Additional Voluntary Contributions build up a pot of pension savings alongside your income and cash lump sum.

https://www.myroyalmail.com/collective-plan/costs

[NWpostie]

I see a bit of an issue for me refard the new scheme and AVC, I plan to retire at 60 and the expected NRA of the CDC will be 67, which means i can only pay up to 6 years of the "new" AVC and another 7 years of not paying into it.

So the CDC AVC would be frozen for 7 years ? Until I claim it otherwise you would be taking a cut for early payment.

[RobertT]

I see a bit of an issue for me refard the new scheme and AVC, I plan to retire at 60 and the expected NRA of the CDC will be 67, which means i can only pay up to 6 years of the "new" AVC and another 7 years of not paying into it.

So the CDC AVC would be frozen for 7 years ? Until I claim it otherwise you would be taking a cut for early payment.

I'm guessing any new AVC would be able to be transferred to a DC scheme in the same way as the current AVC's can. In which case you can do that whenever you want.
Unless you want to leave it until you take your CDC pension and lump sum.
I see no reason why the new AVC would face an early payment reduction anymore than the current AVC's would. Which they don't!

The Lump Sum Booster would obviously increase your lump sum, and will have an NRA of 67 so I assume a reduction will apply to that if taken early.

[NWpostie]

I see a bit of an issue for me refard the new scheme and AVC, I plan to retire at 60 and the expected NRA of the CDC will be 67, which means i can only pay up to 6 years of the "new" AVC and another 7 years of not paying into it.

So the CDC AVC would be frozen for 7 years ? Until I claim it otherwise you would be taking a cut for early payment.

I'm guessing any new AVC would be able to be transferred to a DC scheme in the same way as the current AVC's can. In which case you can do that whenever you want.
Unless you want to leave it until you take your CDC pension and lump sum.

The Lump Sum Booster would obviously increase your lump sum, and will have an NRA of 67 so I assume a reduction will apply if taken early.

Indeed it would still be wise to let it accrue til I'm 67 and claim it, my concern is I will essentially claiming a total of 34 years worth of pre CDC pension, which is a mix of C Section final salary, DB and this halfway DBCBS pension, both NRA 60/65, I'm not sure how much that is going to be or of it would less payment than if it had continued to full term of 40 years service.

I would have to go through the rigmarole of claiming again albeit from Crapita assuming they will be running it, previous stories of their ineptitude does not fill me with confidence.

[RobertT]

Indeed it would still be wise to let it accrue til I'm 67 and claim it, my concern is I will essentially claiming a total of 34 years worth of pre CDC pension, which is a mix of C Section final salary, DB and this halfway DBCBS pension, both NRA 60/65, I'm not sure how much that is going to be or of it would less payment than if it had continued to full term of 40 years service.

I would have to go through the rigmarole of claiming again albeit from Crapita assuming they will be running it, previous stories of their ineptitude does not fill me with confidence.

To be honest I'm not really sure what you're trying to say!

The 40 year limit changed some time ago. I think it was probably when the CARE scheme started, although I could be wrong. Whenever it was, it is now 45 years.

But as the CDC scheme will be completely new and separate from all other RM pension schemes, I would think the number of years we've accrued in the RMSPS and RMPP are irrelevant going forward.

Capita administer the RMSPS. I haven't heard anything to suggest they'll be responsible for any other RM pensions.

EQ were announced as the 'software supplier' for CDC a while back: https://www.pensionsage.com/pa/Royal-Ma ... pplier.php

[NWpostie]

Indeed it would still be wise to let it accrue til I'm 67 and claim it, my concern is I will essentially claiming a total of 34 years worth of pre CDC pension, which is a mix of C Section final salary, DB and this halfway DBCBS pension, both NRA 60/65, I'm not sure how much that is going to be or of it would less payment than if it had continued to full term of 40 years service.

I would have to go through the rigmarole of claiming again albeit from Crapita assuming they will be running it, previous stories of their ineptitude does not fill me with confidence.

To be honest I'm not really sure what you're trying to say!

The 40 year limit changed some time ago. I think it was probably when the CARE scheme started, although I could be wrong. Whenever it was, it is now 45 years.

But as the CDC scheme will be completely new and separate from all other RM pension schemes, I would think the number of years we've accrued in the RMSPS and RMPP are irrelevant going forward.

Capita administer the RMSPS. I haven't heard anything to suggest they'll be responsible for any other RM pensions.

EQ were announced as the 'software supplier' for CDC a while back: https://www.pensionsage.com/pa/Royal-Ma ... pplier.php

What I'm trying to say is I will only have 34 years worth of pension once CDC comes in, instead 40 years worth of contribution when I retire, as I can only take my NRA 60 and NRA65 when they're due, I have essentially lost out 6 years worth of contribution which can only be taken in full at 67.

[RobertT]

What I'm trying to say is I will only have 34 years worth of pension once CDC comes in, instead 40 years worth of contribution when I retire, as I can only take my NRA 60 and NRA65 when they're due, I have essentially lost out 6 years worth of contribution which can only be taken in full at 67.

At 60 you'll also have 8 years worth of NRA65 contributions that can't be taken in full until age 65.