Pension

[Dogbone1510]

Hi all looking for a bit of guidance on pensions
I joined in 2003 when I was 23 and now am 42 obviously have some final salary and all the other schemes since I just wondered what kind of figures I'd be looking at if I left my benefits until I was 60 I.e lump sum and then what pension per week/month would I be looking at? (Or ball park figures on what people are getting now)
Obviously there's the 65 element too which help on that would be good too.
Also I plan to work till 65 (if I don't get ill healthed before obviously)
Thanks all

[RobertT]

A common question, and one that can't be answered with any degree of accuracy due to everyone's service being a bit different. Full time, part time, pensionable allowances, etc.

Luckily, we all receive annual statements which will provide figures applicable to the individual! They should be your first and in my opinion, your only, port of call.

You'll also need to factor in the new CDC scheme which is expected to start within the next 12 months, which will provide a lump sum and pension, with an NRA of 67.

[Dogbone1510]

Thanks Robert I hoped you would have replied as you seem to be the pension guru I've been full time since started I spoke to our office pension officinardo and he kinda reckoned on a 45k lump sum and about 150 ish per week does that sound about right again just after a ball park kinda figure

And is the nra 60 and nra 65/67 have the same elements attached so a lump sum then a weekly/monthly payment.

As when I tried to work it out from the confusing rm info thought it would be about 50k lump sum and £50 per week

[RobertT]

You'll currently be in section C, so you don't get a lump sum as standard, but you can give up some pension to get one. Plus the DBCBS which is predominantly attached to your NRA65 benefits.

Your NRA60 will be made up of about 5 years final salary and 2 years CARE, which won't give you anywhere near £45k lump sum and £150 p/w!

Assuming you take the max lump sum, my guestimate for NRA60 would be about £11k lump sum and £30 p/w pension, plus supplement of roughly £8 p/w until SPA if you've left RM.
You can also take a fairly small amount of DBCBS, at a guess currently no more than about 10% of it.

Your NRA65 will be 8 years of CARE plus currently 4 years of DBCBS(probably 5 by the time CDC starts).
Giving at 65, about £50 p/w pension and £22k(DBCBS) lump sum. With the possibility of giving up some pension for a bigger lump sum. Plus supplement of about £10 p/w until SPA if you've left RM.

*figures are very rough and are based on today and don't include inflationary increases between now and when you take your benefits. I've used my statements as a guide, which won't necessarily correlate with yours!

I reiterate, the best place to find your figures are on your statements!

The new CDC scheme will provide a guaranteed lump sum of 3/80ths, and an un-guaranteed pension of 1/80ths, of pensionable pay per year. Based on current full time basic pay, that would be a lump sum of about £900 and a pension of £300 per year of membership.

[Dogbone1510]

Thanks for that Robert what is the term SPA? Many thanks for the help

[RobertT]

Thanks for that Robert what is the term SPA? Many thanks for the help

State Pension Age.
For you that's likely to be 68, or possibly even later.

[roadrunner bill]

Hi Robert.. quick question I joined in 1989.. does that mean I have 19 years in section c.. I'm still in royal mail.. so I'll have a total of 33 years.. is that correct... thank you...

[RobertT]

Hi Robert.. quick question I joined in 1989.. does that mean I have 19 years in section c.. I'm still in royal mail.. so I'll have a total of 33 years.. is that correct... thank you...

Joining in 1989 puts you in section C, which still applies now!

You'll have about 19 years of final salary(depending on exactly when you started) - 1989-2008.
10 years of CARE. 2008-2018.
4 years of DBCBS(Cash Balance) - 2018-2022.

NRA60 is everything up to 2010.
NRA65 is 2010-2018, plus DBCBS.

*some DBCBS can also be taken with NRA60.

[Dogbone1510]

Thanks Robert this helps massively is the supplement then just until spa then take it it stops?

[RobertT]

Thanks Robert this helps massively is the supplement then just until spa then take it it stops?

Yes. The supplement is only payable until SPA and only if you've left RM employment.

[roadrunner bill]

Hi Robert.. quick question I joined in 1989.. does that mean I have 19 years in section c.. I'm still in royal mail.. so I'll have a total of 33 years.. is that correct... thank you...

Joining in 1989 puts you in section C, which still applies now!

You'll have about 19 years of final salary(depending on exactly when you started) - 1989-2008.
10 years of CARE. 2008-2018.
4 years of DBCBS(Cash Balance) - 2018-2022.

NRA60 is everything up to 2010.
NRA65 is 2010-2018, plus DBCBS.

*some DBCBS can also be taken with NRA60.

Thank you

[Dogbone1510]

Hi Robert again is the cdc scheme would this be £300 ÷ 52?
Or fir me say if I was to go to 65 so another 22 year 300 x 22 ÷ 52?

Also added up all the schemes and got nra 60 at 11k lump 30 p/w and £8 supplement

Then nra 65 22k lump then 50 pw then 10 suplement then the new scheme 900 × 22= 20k then if topics right about £5 pw? So about 55k lump sum and £106 pw pension does raise sound about right? Thanks again for the pension education Robert I know we all probably sound a bit stupid but your help is massively appreciated

[RobertT]

I make it a total of about £53k lump sum and £225 pension p/w, once you have all 3 pensions and assuming you take them at their NRA's of 60,65 & 67.
Plus state pension, which if you qualify for the current full amount would be another £185.

You also have to consider any pay rises you'll hopefully get over the years and inflationary increases to your current NRA60/NRA65/DBCBS benefits, aswell as to the CDC pension and lump sum.
State pensions also increase each year.

For example: that £900 lump & £300 CDC pension per year was based on current full time pay of £458 p/w. But in 20 years time you might earn £600 p/w(random figure). In which case the accrual rate in money terms would be closer to £1200 lump sum & £400 pension per year.

With the caveat being, the plan is to raise CDC pension benefits by inflation each year, but that will only happen if there's enough money in the pot to do so. In some years your CDC pension could actually go down!

More in depth info on CDC can be found here: https://www.myroyalmail.com/collective-plan

Also bear in mind any decision to take current NRA60/65 benefits before NRA would mean a 5% reduction per year. There would also be reductions for taking CDC benefits before it's NRA of 67, but the percentages aren't known at this time.

[Dogbone1510]

Thanks Robert yeah I dug the paperwork out on the new scheme and I got that to work out at another £126 so your figures are about right.

Many thanks again Robert that has been a massive help in understanding the figures thanks for your time.

[RobertT]

Thanks Robert yeah I dug the paperwork out on the new scheme and I got that to work out at another £126 so your figures are about right.

Many thanks again Robert that has been a massive help in understanding the figures thanks for your time.