Section C pension at 55

[ps1970]

Dear All
I'm ex royal mail, took EVR in 2011 with over 22 years service. I'm 55 in October & want to take my NRA60 & 65 pensions. I am on the understanding that to get my correct figure for the NRA60, the supplement (you receive after leaving Royal Mail, payable to 65), is removed from the pension amount, the remaining figure is multiplied by 20, to give your total pension pot, this would then be reduced by 25 %, due to it being taken 5 years early & from this remaining figure, I can calculate my 25% tax free lump sum. The remaining 75% of this pot is then divided by 20, to give me my annual amount, which will be paid monthly & taxed accordingly. When working out the NRA 65, it's the same principle except the reduction to the pot will be 50%, due to it being taken 10 years early
Thank you
Paul

[RobertT]

That's a reasonably good way of getting ballpark figures. But you'll have to ask the RMSPS for a quote to get a more accurate amount.
I think you can usually do that 3 months before you're 55.

*The supplement is paid until your state pension age, which sounds like it will be 67 in your case.

[ps1970]

Hi Robert, thank you for your reply. I also reduced the supplements for both NRA60 & 65 accordingly & further reduced them by the current tax rate to get an 'as honest fiigure'. Yes I will be requesting my quotation in 2 weeks time. I wonder how accurate, are our calculations to the actual Royal Mail penson. quotation, using the method already mentioned ?
Cheers
Paul

[NorthernBoy]

Dear All
I'm ex royal mail, took EVR in 2011 with over 22 years service. I'm 55 in October & want to take my NRA60 & 65 pensions. I am on the understanding that to get my correct figure for the NRA60, the supplement (you receive after leaving Royal Mail, payable to 65), is removed from the pension amount, the remaining figure is multiplied by 20, to give your total pension pot, this would then be reduced by 25 %, due to it being taken 5 years early & from this remaining figure, I can calculate my 25% tax free lump sum. The remaining 75% of this pot is then divided by 20, to give me my annual amount, which will be paid monthly & taxed accordingly. When working out the NRA 65, it's the same principle except the reduction to the pot will be 50%, due to it being taken 10 years early
Thank you
Paul

When you get your actual figures can you confirm if indeed they do remove the supplement, prior to working out the maximum lump sum.

I cannot see anything online that says this is the case.

Can you also let us know how long it takes for them to get the figures back to you from first applying, as I will be requesting my figures soon.

Many thanks

[ps1970]

No probs, will post an update once I know all the answers. I'm sure the supplement is just what it is ' a supplement ', only payable if you don't work for RM anymore & so for my personal calculations I've just taken the supplement out of the pension amount......hopefully, won't be disappointed then.
Paul

[NorthernBoy]

No probs, will post an update once I know all the answers. I'm sure the supplement is just what it is ' a supplement ', only payable if you don't work for RM anymore & so for my personal calculations I've just taken the supplement out of the pension amount......hopefully, won't be disappointed then.
Paul

Thanks Paul. It’s really useful when people share information on here as I am sure it’s helps in their planning.

You may be right on the supplement not being included in the calculation, but if it is then the lump sum potential will be higher. Looking at previous threads the conversion rate is usually around the 20 to 1 level. Personally I am looking to take the max lump sum at 55.

[fitz15]

I was wondering is there in merit in taking the full pension and not taking the full lump sum

[clashcityrocker]

I was wondering is there in merit in taking the full pension and not taking the full lump sum

It depends how long you live.
Most people (I assume) take the lump sum to either pay off debts or treat themselves.

[RobertT]

It depends how much you value a higher inflation proofed income for life, over a one off lump sum.
As Clash says, whether one is better financially comes down to when you die.

As with a lot of financial decisions, it comes down to personal circumstances and choice, and what's right for one person isn't necessarily right for another.

If you have AVC's and the DBCBS(for Age65 benefits), you can potentially have both full pension and a larger lump sum(compared to just having basic main scheme benefits).

[Hyrrokkin]

It depends how much you value a higher inflation proofed income for life, over a one off lump sum.
As Clash says, whether one is better financially comes down to when you die.

As with a lot of financial decisions, it comes down to personal circumstances and choice, and what's right for one person isn't necessarily right for another.

If you have AVC's and the DBCBS(for Age65 benefits), you can potentially have both full pension and a larger lump sum(compared to just having basic main scheme benefits).

The very reason why i had/have AVC's - so i could have the full pension.

Still amazed how few actually have AVC's in RM or even know about them.
You only have to put in a small amount if you cannot afford much and over enough time it will work nicely for you (the longer the better)

[RobertT]

Fully agree!

I read somewhere that about 30% of RMCPP members have signed up to the booster, and that's great.
But I doubt if anywhere near that percentage of section C or F members paid into Bonusplan, which was a similar idea offering low contributions plus a bit extra from RM.

I'm sad enough to have kept a record of how much I've paid into my AVC's over the years.
My net contributions into Flexiplan add up to about 30% of it's current value and Bonusplan is only around 16%.

So both have proved to be decent investments and will enable me to have both a full RM pension and a bigger tax free lump sum.

[Hyrrokkin]

Fully agree!

I read somewhere that about 30% of RMCPP members have signed up to the booster, and that's great.
But I doubt if anywhere near that percentage of section C or F members paid into Bonusplan, which was a similar idea offering low contributions plus a bit extra from RM.

I'm sad enough to have kept a record of how much I've paid into my AVC's over the years.
My net contributions into Flexiplan add up to about 30% of it's current value and Bonusplan is only around 16%.

So both have proved to be decent investments and will enable me to have both a full RM pension and a bigger tax free lump sum.

That is due to you having the foresight and sense to plan long term while the majority did not.
Nothing beats it tax wise and as long as you give yourself enough time it can be a great return.
My AVC's are not a huge amount but they are worth a lot more than i put in.

[RobertT]

Yes, I took an interest in my pension/retirement in my 20's, which is probably a lot earlier than most do, and it's definitely paid dividends!

I can only agree again with what you say.....

Pensions are excellent ways to save due to the tax breaks and beat other savings vehicles hands down.

One of the best things to do is to start as early as possible, even if it's only small amounts, because the money you save first will have longer to grow and compound.

If you can get a bit more money from your employer, grab it with both hands!

My Bonusplan in particular is a good example of how small sums can add up over time and hopefully the Booster will be similar for many at RM in the future.

For the cost of less than a pint of beer a week, you could be helping to knock a few years off your working life.

[renrag40]

No probs, will post an update once I know all the answers. I'm sure the supplement is just what it is ' a supplement ', only payable if you don't work for RM anymore & so for my personal calculations I've just taken the supplement out of the pension amount......hopefully, won't be disappointed then.
Paul

Thanks Paul. It’s really useful when people share information on here as I am sure it’s helps in their planning.

You may be right on the supplement not being included in the calculation, but if it is then the lump sum potential will be higher. Looking at previous threads the conversion rate is usually around the 20 to 1 level. Personally I am looking to take the max lump sum at 55.

I don't see why the supplement would be included in pension calculations.
It a transitional payment that ends when you hit your state retirement age.
Your RM pension is a whole of life pension.
If the supplement was included in your pension calculations it would increase the cost of providing your pension over the rest of your life. It doesn't seem logical that a pension provider would do that. I maybe wrong. But it just doesn't seem logical.

[RobertT]

This is something that comes up on here occasionally and also something that I don't think we've ever had a definitive answer to.
The problem is that people don't come back and tell us after they've had their figures!

The RMPP guide to benefits does say the supplement is included when working out the lump sum, but the general unproved consensus on here seems to suggest it might not be.

My theory is that it might actually depend on whether you're entitled to the supplement at the point of taking your benefits, and that will depend on your RM employment status at the time.