charli67 wrote:can anyone explain to me where they get this lump sum of £81,000? i will be 51 next year with 32 years service and earn roughly £25k, yet my latest pension statement says my lump sum is £27,000. a bit less than £81k!
The examples given are just that – examples! There is no indication that you will definitely get the amounts shown.
We have yet to be given any firm information on how this Cash Balance scheme is going to work in practice. But my understanding is that the ‘cash balance’ will be a lump sum on top of what you’ve already accrued by 31st March 2018 – it will not be on top of your ‘expected pension at 65’ figures on your statement!
You will be building up a certain amount of money each year based on yours and RM’s contributions – they are proposing a 6% employee rate and 12.6% employer rate. That is pensionable pay, so it won’t include overtime or some allowances and section C members will still have the Lower Earnings Deduction(£3,328) taken off.
They are also assuming a percentage growth rate each year of 2% above CPI inflation. Which based on the latest CPI figures(April 2017) would be a total of 4.6% growth per year. But whether that’s achieved will depend on where the money is invested.
So I would assume the only amount that’s actually guaranteed would be the sum total of both employee and employer contributions? But as the proposal is that the CB idea is going to be part of the RMPP rather than a standalone scheme, there could be a set retirement age and so reductions for taking it early?
So until we’re told any different we can only really speculate how the Cash Balance scheme will work.
*We will be given the opportunity to join the DC scheme instead, if we want to. All the details of that are in the big red book we all received.