NRA 65 Help/Advice

[postman1979]

I hope there is someone out there that can offer some assistance with my NRA65 options.
I thought I was reasonably intelligent enough to understand mine but I am having difficulties.
I joined the pension schemes upon joining RM in 1979.
My NRA60 is already in payment and in April, I am 65 so my NRA65 options have arrived and I need help.
I can follow my RMSPS from Capita and know which option to choose so no problems there.
The issues are with my RM Pension Plan options which are as follows:
Regular Income Tax-free cash From Cash Balance Tax Free Leftover from Cash Balance
Option 1 & 1a
1 £2723:23 PA £8169:69 None None
1a £2723:23 PA £8169:69 + £9985:17 £36,650:48

Option 2
£ 2330:37 PA £15,535:80 None None

Option 3 &3a
3 £3118:28 PA None None None
3a £3118:28 PA None £20,788:52 £25,847:13

The survivors pension under any option is relatively the same.
My wife is already retired and claiming her pension while working part-time.
We are fortunate that we have reasonable savings in ISAs’ and shares plus the house and wills and powers of attorney in place for the future and funeral costs are already covered.
I am tempted by option either 1a or 3a as I am looking to not to carry on working beyond this year.
I know that you are not a regulated financial advisors and will not commit you to any advice but I would like your insight into my options

TIA

[RobertT]

Here's a brief summary of each option:

1 & 1a – Basic pension and standard lump sum, with the choice whether to take your Cash Balance with your main benefits or not.
2 – Give up some pension for a bigger standard lump sum. No option to take Cash Balance.
3 & 3a – Give up your standard lump sum in return for a bigger pension, with the choice whether to take the Cash Balance with your main benefits or not.

If you don't take the Cash Balance with your main benefits, you don't lose it, but you will then have to transfer the money over to a personal pension and access it from there. However as others on this forum have found, if the balance is over £30k you'll need the assistance of an IFA. Most IFA's don't provide that service and if you find one that does, it'll be expensive - you're talking a minimum of around £4k.

If my maths is correct(I'm happy to be corrected), the commutation rate for giving up some pension for a bigger lump sum in option 2, is around 1:18.75. So for each £1 in pension you forgo, you'll get £18.75 in lump sum.
Whereas the rate for giving up all of your standard lump sum for more pension in options 3 & 3a, is around 1:19.70. so for each £19.70 in lump sum you give up, you'll get another £1 in pension.

As it seems your Cash Balance is over £30k, I would agree that options 1a or 3a are the better choice. So it comes down to whether you want a bigger pension or a bigger standard lump sum.
You also need to factor in how much tax you're likely to pay, as the 'left over' Cash Balance will be taxable along side your wages.

[fatcat1uk]

I was under the impression that option 2 ,would pay out the cash balance sum as an uncrystalized lump sum 16 weeks after your 65 birthday .25%tax free.,

[RobertT]

I was under the impression that option 2 ,would pay out the cash balance sum as an uncrystalized lump sum 16 weeks after your 65 birthday .25%tax free.,

You may well be right, but I was going on the information provided.