Help for a novice

[Stef]

The minefield of our 3 pensions has really confused me. Although reading through the various Pension chats have been very helpful but I still feel I have a lot to learn. Please can you keep me right. Would I be correct in my thinking that 2 of my pensions lump sums are above the 25% tax free amounts.
NRA 60 £10000 per year + AVC's £17000. Hopefully I am correcting in thinking this is ok and is not taxable.
NRA 65 £3700 per year + DBCBS £31000. My assumption is a good bit of my DBCBS will be taxable?
Concerning the NRA 67 I only plan to pay into it for 3 years. Therefore NRA 67 £1000 per year + Lump sum £3000 + Lump booster £1500 + AVC's £10000. My fears in the NRA 67 is that the AVC's of £10000 are all going to be taxable. As I think the Lump sum and Lump sum booster will cover most of the 25% free lump sum allowed.
Hopefully my assumptions are not too far off and I am starting to understand our 3 pensions a wee bit more. Please feel free to comment if I have got something wrong as I am keen to learn. Thanks in advance it is much appreciated.

[RobertT]

The minefield of our 3 pensions has really confused me. Although reading through the various Pension chats have been very helpful but I still feel I have a lot to learn. Please can you keep me right. Would I be correct in my thinking that 2 of my pensions lump sums are above the 25% tax free amounts.

NRA 60 £10000 per year + AVC's £17000. Hopefully I am correcting in thinking this is ok and is not taxable.

Correct.

NRA 65 £3700 per year + DBCBS £31000. My assumption is a good bit of my DBCBS will be taxable?

About £6,500 would be taxable, but only if your income for that particular tax year is already above the personal tax allowance(currently £12,570)

Concerning the NRA 67 I only plan to pay into it for 3 years. Therefore NRA 67 £1000 per year + Lump sum £3000 + Lump booster £1500 + AVC's £10000. My fears in the NRA 67 is that the AVC's of £10000 are all going to be taxable. As I think the Lump sum and Lump sum booster will cover most of the 25% free lump sum allowed.

I think you're probably right.
There is the option to transfer out any of the 3 aspects of the new scheme - pension, lump sum(inc booster) and AVC's. Which might alleviate the tax situation, but that will depend on your circumstances and income at the time you access that money.

[Stef]

Thank you Robert T for your reply. You are so helpful

[Stef]

Another thing i have never understood is whether retiring in January would have an impact on how much tax you would pay when you receive your pension and lump sum. For instance i plan to retire in January 2028 (age 60) which would be three quarters of the way through a tax year, say i have earned £22000 up until January then i retire, would my NRA 60 pension and AVC'S lump sum be taxed more than if i retired in April at the beginning of the tax year? I have never understood this and always wondered what the answer was.

[yellowbelly]

Another thing i have never understood is whether retiring in January would have an impact on how much tax you would pay when you receive your pension and lump sum. For instance i plan to retire in January 2028 (age 60) which would be three quarters of the way through a tax year, say i have earned £22000 up until January then i retire, would my NRA 60 pension and AVC'S lump sum be taxed more than if i retired in April at the beginning of the tax year? I have never understood this and always wondered what the answer was.

It can be a bit confusing can't it? No definite answer as it depends on an individuals financial circumstances.

You could probably end up paying more tax (in terms of the number of pounds paid, not an increased tax % rate unless you're minted) retiring in January as you've already used up the tax free personal allowance for that year as you've earned 22k from RM.

But if you retire in April and have no other income (job) then you've got a brand new personal allowance for the year to apply against your pensions, BUT if you take your lump sums(s) then, HMRC could probably assume that it's also regular income and tax you assuming you're going to be taking that amount out every month as an 'income' and tax you (incorrectly), you'd then have to claim it back. This is common apparently if you check out the personal finance websites.

Lot's of thoughts about this on the web with some for March, some for April:

https://www.hl.co.uk/pensions/insights/ ... withdrawal (Hargreaves Lansdown)

https://www.boundless.co.uk/news-compet ... -to-retire (Civil Service associated site so fairly unbiased)

https://rtsfinancialplanning.co.uk/why- ... -tax-year/

Have a good read!

[Stef]

Thank you for your information yellowbelly . An interesting read cheers

[Grads75]

Could someone please explain .I started in 1998 full time postman paid into pensions since starting I have 3 different pensions looking to retire at 67 which will be 2046 If make it how much roughly per week will I get from the pensions if don't take lump sums would be 48 yrs service thanks

[RobertT]

Could someone please explain .I started in 1998 full time postman paid into pensions since starting I have 3 different pensions looking to retire at 67 which will be 2046 If make it how much roughly per week will I get from the pensions if don't take lump sums would be 48 yrs service thanks

Your RMPP and RMSPS statements will tell you want you're likely to get a 60 and 65.

The accrual rate of the RMCPP will be 1/80ths for the pension and 3/80ths for the lump sum. So a simple bit of maths is required.

For example:
Your weekly pensionable pay is £500 x 52 / 80 = pension accrued per year = £325
Then multiply by 3 for lump sum accrued per year = £975
Multiply by number of years you think you'll be in the scheme.

The idea is that both pension and lump sum will increase each year so you should get more, but there's no absolute guarantee of that.

Also get your self a state pension forecast. You're likely to get that at 68, possibly afterwards?

[Grads75]

Could someone please explain .I started in 1998 full time postman paid into pensions since starting I have 3 different pensions looking to retire at 67 which will be 2046 If make it how much roughly per week will I get from the pensions if don't take lump sums would be 48 yrs service thanks

Your RMPP and RMSPS statements will tell you want you're likely to get a 60 and 65.

The accrual rate of the RMCPP will be 1/80ths for the pension and 3/80ths for the lump sum. So a simple bit of maths is required.

For example:
Your weekly pensionable pay is £500 x 52 / 80 = pension accrued per year = £325
Then multiply by 3 for lump sum accrued per year = £975
Multiply by number of years you think you'll be in the scheme.

The idea is that both pension and lump sum will increase each year so you should get more, but there's no absolute guarantee of that.

Also get your self a state pension forecast. You're likely to get that at 68, possibly afterwards?

Sorry but how much per week at retirement if it's only £325 a year x 40 yrs=£13000 I will have spent it in 1 year or is this every year until death?

[RobertT]

That's a guide to how much pension and lump sum you accrue for each year of membership of the RMCPP.

So if you're in it for 20 years, you'll get a pension of £6,500 per year for life and a one off lump sum of £19,500.