New Collective Pension Plan Questions

[RobertT]

What will happen to the surplus money in the old pension plans when the new one starts up.

In the short term nothing really changes from the situation we've been in since the pension closed to future accrual in 2018. The fact a new scheme is starting isn't necessarily relevant.

But here's some possibles:

All RMPP pensions get an uplift.
The company may have it's eyes on it to put back into the business/help themselves to it.
The union apparently think it could be used to reduce the NRA of the RMCPP down to 65 from 67.
The government might decide to tax it.
The investments could flop and the trustee needs it to prop up the scheme.

*The DBCBS has also got a separate surplus, which is much smaller than the pension one.

[fredtheegg]

So what has happened to the money we have paid in since 2018? We were originally told this would all go into a big pot to prepare for the new collective pension going live.

So asking my union last week I said does this mean we have effectively been paying into the new scheme since 2018 and will it be back dated to 2018? They said yes but I tend to think they may be wrong on this one.

My info : 40 plus years in the job. Taken NRA60 already and waiting to take NRA65 at 65 in around 3 years time. Will the new new pension be worthwhile to me and people in a similar position?

[RobertT]

So what has happened to the money we have paid in since 2018? We were originally told this would all go into a big pot to prepare for the new collective pension going live.

Take a look at your last RMPP statement and every one since 2019 – the DBCBS is on there!

It's always been a transitional scheme and part of the RMPP. Anyone who told you it was part of the new scheme, didn't know what they were talking about!
Although there is a possibility that transferring the DBCBS over to the RMCPP could be an option at some point.

So asking my union last week I said does this mean we have effectively been paying into the new scheme since 2018 and will it be back dated to 2018? They said yes but I tend to think they may be wrong on this one.

It's totally wrong.

My info : 40 plus years in the job. Taken NRA60 already and waiting to take NRA65 at 65 in around 3 years time. Will the new new pension be worthwhile to me and people in a similar position?

Why not?
Would you have opted out of the NRA60 or NRA65 if they had carried on?
It's still 3 years worth of pension you won't get if you opt out. For a normal full time postie that should be about £1,000 in pension per year and £3,000 in lump sum at 67.

[heapsy]

Just wondering, is there any point in paying into the AVCs for the new pension? I don't intend to go beyond 60. 3 years away, and I don't intend to take my pensions early. So is it worth paying AVCs for less than 3 years, if they then end up being taxed?

[Hyrrokkin]

Just wondering, is there any point in paying into the AVCs for the new pension? I don't intend to go beyond 60. 3 years away, and I don't intend to take my pensions early. So is it worth paying AVCs for less than 3 years, if they then end up being taxed?

Pondering the same question - although i have more time to serve !
I have a SIPP - thinking of increasing contributions to that after the current AVC's finish in October.

[RobertT]

Just wondering, is there any point in paying into the AVCs for the new pension? I don't intend to go beyond 60. 3 years away, and I don't intend to take my pensions early. So is it worth paying AVCs for less than 3 years, if they then end up being taxed?

It looks likely the lump sum including the booster will provide the majority of the 25% tax free amount when taking the RMCPP pension. Therefore I assume any AVC's that take you over 25% would be paid as a UFPLS, as they are at the moment.

Assuming a basic rate taxpayer and using just the contributions paid and no investment growth:

When you access the money either as a UFPLS or after transferring, £25 of each £100 will be tax free, with the remaining £75 being taxed at 20%, which is £15. So you'll still see £85 in your pocket, but that will have only cost you £72 net, when factoring in tax relief and PSE.

Even if you max out your AVC payments(within PSE), the amounts of money involved aren't going to be massive, but that increase from £72 to £85 still represents an 18% increase on your cash - not bad for a 2-3 year investment!

You then have the choice to take the easy profit or leave it invested and hope returns provide a bigger pot.

Pondering the same question - although i have more time to serve !
I have a SIPP - thinking of increasing contributions to that after the current AVC's finish in October.

You might still have the same tax implications via your SIPP, depending on other income at the time. But as you won't be benefiting from PSE, each contribution will have cost you more. It might only be 8p in the pound, but that will mount up over time.

There's also the option to transfer AVC's out, which might be more flexible and tax efficient for some.

[Hyrrokkin]

As always thanks Sir RobertT

In my case i will continue paying into AVC's but lower amounts and increase SIPP payments the same.
I like to have multiple options when it comes to pensions/savings. (I think most do).
As always what suits is down to each of us to decide.

[fredtheegg]

So what has happened to the money we have paid in since 2018? We were originally told this would all go into a big pot to prepare for the new collective pension going live.

Take a look at your last RMPP statement and every one since 2019 – the DBCBS is on there!

It's always been a transitional scheme and part of the RMPP. Anyone who told you it was part of the new scheme, didn't know what they were talking about!
Although there is a possibility that transferring the DBCBS over to the RMCPP could be an option at some point.

So asking my union last week I said does this mean we have effectively been paying into the new scheme since 2018 and will it be back dated to 2018? They said yes but I tend to think they may be wrong on this one.

It's totally wrong.

My info : 40 plus years in the job. Taken NRA60 already and waiting to take NRA65 at 65 in around 3 years time. Will the new new pension be worthwhile to me and people in a similar position?

Why not?
Would you have opted out of the NRA60 or NRA65 if they had carried on?
It's still 3 years worth of pension you won't get if you opt out. For a normal full time postie that should be about £1,000 in pension per year and £3,000 in lump sum at 67.

Thank you RobertT for the info