Is this true taking nra 60 early?

[RobertT]

Thanks for that Rambo. Those figures are just for my nra 60 pension built up until 2012 I think im right in saying? Ive just checked on my statement and it seems I got the lump sum wrong. My actual figures are £10'440 anual pensionsion and £31'322 lump sum. Thats working the night shift since 1998 so I would guess those figures would be slightly higher than average as the night shift allowance is pensionable I assumed.

NRA60 is up to 2010.

[ANDREW CROCOMBE]

Took my 60 pension last year, 30 yr service next year. Think i got around £25,000 and monthly about £300 on the deal id agreed. Just putting it away in the bank coz i dont trust RM these days, hopefully build up nice till im 65.

[aiden01]

Took my 60 pension last year, 30 yr service next year. Think i got around £25,000 and monthly about £300 on the deal id agreed. Just putting it away in the bank coz i dont trust RM these days, hopefully build up nice till im 65.

Surely if you took it you know exact figure your being paid..

[renrag40]

For pension accrued up to 31-3-12, if you divide the MAXIMUM tax free lump sum figure by 80 you will have your gross monthly pension figure.
For example, if your maximum tax free lump sum on your nra 60 pension was £32,000 then your gross monthly pension would be £400.
The above does not work for the nra 65 that RMPP is responsible for because the lump sum will, for people in Section C, be paid out from the present interim cash balance scheme that we are paying into. Thereby not reducing your monthly pension to receive a tax free lump sum.
For people in Section B, the difference between the standard and the maximum tax free lump sums would be paid from the interim cash balance scheme. For the remaining money in the interim cash balance scheme.... 25% would be tax free, 75% would be taxed at your nominal tax rate.
For example, if the remaining money was £10,000. £2,500 would be tax free. The other £7,500 would be taxed at your nominal rate, which for most people would be 20%. So, you would pay £1,500 in tax.

[RobertT]

For pension accrued up to 31-3-12, if you divide the MAXIMUM tax free lump sum figure by 80 you will have your gross monthly pension figure.
For example, if your maximum tax free lump sum on your nra 60 pension was £32,000 then your gross monthly pension would be £400.
The above does not work for the nra 65 that RMPP is responsible for because the lump sum will, for people in Section C, be paid out from the present interim cash balance scheme that we are paying into. Thereby not reducing your monthly pension to receive a tax free lump sum.
For people in Section B, the difference between the standard and the maximum tax free lump sums would be paid from the interim cash balance scheme. For the remaining money in the interim cash balance scheme.... 25% would be tax free, 75% would be taxed at your nominal tax rate.
For example, if the remaining money was £10,000. £2,500 would be tax free. The other £7,500 would be taxed at your nominal rate, which for most people would be 20%. So, you would pay £1,500 in tax.

NRA60 relates to pension accrued up to to 31st March 2010!
NRA65 is 1st April 2010 to 31st March 2018.

Although the original idea for the DBCBS was to fund the tax free cash, so as to not reduce pension(personally I think it's the best use). There is another option available:

Section C members don't have to use the Cash Balance(DBCBS) to fund the tax free lump sum. They can take a reduced pension to fund it and then also take the DBCBS as a lump sum, with the first 25% of that also being tax free.
Similarly, section B members can increase their tax free lump sum by reducing their pension, and then take the first 25% of the DBCBS also tax free, with the remainder taxable.

The DBCBS is 'attached' to RMPP benefits only, so that is the 6 years of the NRA65 between 2012-2018.
RMPP are also responsible for some inflationary increases on RMSPS benefits.

The first 2 years of NRA65(2010-2012) is the responsibility of the RMSPS and so the DBCBS is not directly attached to those benefits, or any other benefits before 2010.

The original plan for the DBCBS, was that it would be used to fund the tax free cash with all our NRA60 & NRA65 benefits, in a similar way to AVC's. But the RMPP needed Cabinet Office approval for it to be used for RMSPS lump sum purposes.
That approval was refused!

[NWpostie]

For example, if your maximum tax free lump sum on your nra 60 pension was £32,000 then your gross monthly pension would be £400.

£400 is not a lot.

[renrag40]

I never said that nra60 finished in 2012.
What I was stating was a mathematic fact that if you divide the the maximum tax free lump sum by 80 you have your gross monthly pension. That applies to 2010 to 2012 accrual that RMSPS is responsible for.

[RobertT]

I never said that nra60 finished in 2012.
What I was stating was a mathematic fact that if you divide the the maximum tax free lump sum by 80 you have your gross monthly pension. That applies to 2010 to 2012 accrual that RMSPS is responsible for.

That may be correct with regards to just your pension, but you're still mixing both NRA60 with NRA65, and final salary with average salary.
This thread is about NRA60 after all.

Meaning your maths won't be correct until you take NRA65 at 65, assuming it is in the first place.

In practice, everyone will have different amounts of service in each scheme, therefore your maths might work for you, but won't necessarily for everyone.

Plus, the ability to take some DBCBS with NRA60, puts a different complexion on things.

[wolfman]

When you take your nra 60 pension do you only get 2 options? If so I assume one is 25% as a tax free lump sum but what percentage is the second option or is it different for everyone? Is it a lesser lump sum for a bigger monthly amount? Also is there any advantage/disadvantage in choosing the 25% tax free option. I'm in section a/b pension if that makes a difference. Thanks people

[RobertT]

When you take your nra 60 pension do you only get 2 options? If so I assume one is 25% as a tax free lump sum but what percentage is the second option or is it different for everyone? Is it a lesser lump sum for a bigger monthly amount? Also is there any advantage/disadvantage in choosing the 25% tax free option. I'm in section a/b pension if that makes a difference. Thanks people

Section A/B members get a lump sum as standard.
You can chose to give up some pension to make that bigger, up to a maximum of 25%. Or you could also do the opposite and give up some lump sum to make your pension bigger.

Some of your Cash Balance(DBCBS) can also be paid out with NRA60, meaning there's no need to give up as much, or any, pension to get a bigger lump sum.

Section C members don't get a lump sum as standard, but can give up some pension to get one.

The maximum lump sum is 25%, the minimum is no lump sum at all. Or you can chose any percentage in between.

[vmaxv4]

When you take your nra 60 pension do you only get 2 options? If so I assume one is 25% as a tax free lump sum but what percentage is the second option or is it different for everyone? Is it a lesser lump sum for a bigger monthly amount? Also is there any advantage/disadvantage in choosing the 25% tax free option. I'm in section a/b pension if that makes a difference. Thanks people

The original options prior to 1st April 2018 for section A/B members were
1. Standard
2.Maximum Tax Free
3.Maximum Pension
You will receive the same as above but a percentage of your DCBCS will also be in your options if you wish to take it or not with your NRA60.

[wolfman]

As always thank you Robert & vmax for your replies. I didn't know that about taking part of your dcbcs. I've been trying to learn as much as I can from these forums for a few years but there's so much to it. Thank god for these forums & people like yourself for helping out . Does that mean I can leave the dcbcs cash balance and I will get that at 60 if I took the rest of my nra 60 pension early, or do you not get that until 65 if you choose not to take it?

[vmaxv4]

As always thank you Robert & vmax for your replies. I didn't know that about taking part of your dcbcs. I've been trying to learn as much as I can from these forums for a few years but there's so much to it. Thank god for these forums & people like yourself for helping out . Does that mean I can leave the dcbcs cash balance and I will get that at 60 if I took the rest of my nra 60 pension early, or do you not get that until 65 if you choose not to take it?

The simple answer is yes.
My understanding of the DCBCS is it was a short term solution to the CDC being implemented.
However because it’s now nearly 5 years old sometime recently the option for section A/B members that I personally have spoke to have been given the option to use some of their DCBCS with their NRA60.
Why I say that MY own situation was the DCBCS was in force when I requested & subsequently received my pension mid way through 2018.
Nowhere was the option to receive any portion of the DCBCS as a portion of my NRA60.
So I have my full quota of DCBCS to go to my NRA65 when I am eligible.
On speaking to a mate who decided to receive some of his DCBCS & comparing annual illustration to mine shows the figures he is now receiving have been reduced.
Ps I vaguely remember it was 10% for his lump sum only. (Don’t quote me on that)

[RobertT]

The original idea of the DBCBS was to fund the tax free cash with both NRA60 and NRA65, but RM needed Cabinet Office approval for it to be used with RMSPS benefits. That approval wasn't forthcoming, so it is only attached to RMPP benefits.

The RMPP are responsible for benefits accrued from 2012 onwards, which is most of the NRA65. Plus they are also responsible for some inflationary increases to RMSPS benefits.
Therefore some DBCBS which is part of the RMPP, can be taken with NRA60 which is part of the RMSPS.

I suspect the reason vmaxv4 couldn't take any DBCBS with his NRA60 in 2018, was because the DBCBS only started in April 2018 and the first inflationary increase afterwards wasn't until April 2019.
So I would assume, anyone taking their NRA60 after April 2019 would be entitled to fund some of their lump sum with their DBCBS pot.

As time goes by, the amount of RMSPS inflationary increases that RMPP are responsible for will grow. Meaning the amount of DBCBS that can be taken with NRA60 benefits will also grow.

The DBCBS can be used in 2 ways:

1. Take it with NRA60 and/or NRA65. Some may be tax free and some maybe taxable, depending on which section you're in and the options you chose.

2. Transfer it out to another pension scheme, such as a personal pension. In which case normal DC pension rules will apply when you access it – the first 25% is tax free and the remainder classed as income and taxed under normal PAYE rules.

It is not possible to just withdraw it as cash from the RMPP whenever you want.
It's a pension, therefore pension rules apply to it.

[Hyrrokkin]

Jesus Christ
Reading all that you need a PhD in Pensions to understand all the RM pension options,tax implications and pitfalls
It is frankly ridiculous...no wonder so many posties get lost and confused about our pensions