Age 65 cash balance fund.

[heavy load]

Hi guys,
Some help if possible,I have had to take ill health retirement at 54 and can’t access my pension until 55 I am definitely taking all my RMSPS pension at 55 but am undecided about my RMPP as don’t really want to lose 50% of it but as said undecided.
I spoke to someone at pensions this morning and she is under the assumption that the Age 65 cash fund balance is worked out the same as the rest of the pension,I didn’t believe it was.
i.e my fund is approximately £20,000.
Does this mean at 55= £10,000
at 60=£15,000
at 65=£20,000
Or is it worked out differently to pension deductions of 5% a year.
Thank you if you take the time to answer.

[RobertT]

The RMPP 'guide to benefits' seems to suggest the DBCBS is reduced for early payment, although no percentages are mentioned.
But posts on this forum from people who've taken it before NRA, would suggest it isn't reduced.

The PSC in Sheffield are known for giving out different answers to the same question. So as I haven't got personal experience and don't know the truth for sure, I'm inclined to believe this forum!

[heavy load]

Thank you,I will go with the forum like yourself.

[heavy load]

Sorry,hopefully this will be my last question.
I think I’m going to take all my 60 benefits at 55 which will give me a pension of about £10,700 without lump sum.
I have £39000 in AVCs which I will take tax free.
I will take my 65 benefits at 60 which will give additional pension of £2,600 without lump sum.
Would I then be able to take my whole £20,000 Cash Balance tax free or because it’s like a second withdrawal of pension am I only allowed 25% of my 65 benefits as a lump sum which would be 25% of £52,000 or is it all counted together with my 60 benefit calculations,even though it wasn’t drawn at same time?
Hope this all made sense

[RobertT]

I believe they'll work out your NRA60 and NRA65 benefits separately.

I assume you've taken into account the 5% per year reduction when taking your pension before NRA?

Bear in mind the DBCBS is only attached to RMPP(2012-2018) benefits, whereas the NRA65 relates to 2010-2018 benefits. Meaning not all of the £2,600 you mention will be factored in when working out the maximum tax free amount from the DBCBS.

Once the 25% has been allocated, the remainder will be paid out as a Un-crystallised Funds Pension Lump Sum(UFPLS), which means the first 25% of that will also be tax free, with the rest being taxed under normal PAYE rules.

[heavy load]

Yes you’re right I did take the 5% reduction into account,You are I have to say incredibly knowledgeable on all this stuff very impressive.
So if I’m understanding you correctly I am going to roughly say £2,100 at worst instead of £2600, taking into account the info you gave me about 2010-2012 so 20 x £2100=£42,000 so I can take £10,500 of my £20,000 DBCBS sum tax free leaving £9,500 of which £7125 will be taxed so I will only lose about £1,425 to tax man which is only just over 7% of total.
That makes it worth going with my plan rather than taking everything at 55 years of age.
Robert could you just confirm that is roughly correct if you don’t mind.

[RobertT]

As a rough guide to working out your RMPP NRA65 in relation to your total NRA65, I would just divide by 8 and then multiply by 6, which in your case would give you a pension of £1,950.
That gives a total value of £39,000.

That £39k will be 75% of your total RMPP NRA65 pot, meaning the other 25%(the tax free cash) is made up from the DBCBS.
I make that £13k tax free, with the remaining £7k being paid out as a UFPLS.

25% of that £7k will also be tax free, so in total that's £14,750 tax free and £5,250 taxable.

[heavy load]

Thank you so much for taking the time to help me.
Kieran.

[iceman16]

Does any postal worker ever known to get over 10,000 per year in 65 pension I personally dont know any !

[freespeech]

There are other grades in the same scheme.

[RobertT]

There are indeed other grades in the same scheme, but accruing a £10k pension for a scheme that was only open for 8 years is damn good going.

[mags999]

must be a manager rubbing our noses in it