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Topping up my pension

13 Nov 2019, 16:06

Looks like at 58 I may have the option of IHR what I was wondering could I top up my pension with some of the lump sum I will get from my IHR I've heard it's 34 weeks tax free and 16 weeks in lue taxable.
I'm 60 in June 2021and will get my state pension in June 2028.
While I've been on SSPPR I haven't been contributing to my pension neither have R M so can I make up that 3 month shortfall and I I do will RM have to make up their shortfall??
Kind regards Tony

Topping up my pension

13 Nov 2019, 16:48

The last I heard the IHR lump sum 34 weeks pay plus either 9 or 12 weeks PILON(taxable), depending on service.

You don't say which pension scheme you're in but I'm assuming you're in either section A, B or C of the RMPP and currently in the DBCBS?

The plan guide states:

What if I am absent from work and not being paid?
If you have a period of unpaid absence you may, on your return to work, pay all contributions (both your own and the Company’s) that were due during your absence, based on the pay you would have received had you not been absent. If you choose to do this, your Cash Balance benefit will be treated as having built up over the period you were absent in the same way as it would have done if you had not been absent. Reservists have three options as set out on the ‘Life Events, Taking a break from work’ page of the website.


In theory you can pay some of your lump sum into a Flexiplan AVC, but not directly into your actual pension. But as you're only allowed to contribute into AVC's via your pay, you'll have to set it up so it goes in the week you receive your lump sum.
I would advise getting in touch with the pension service centre in Sheffield for clarification on whether you can actually do that or not.

Their contact detail are on the RMPP website: https://www.royalmailpensionplan.co.uk/

Another option might be to set up a personal pension and pay some of you lump sum into that. It will be totally separate from RM, but you will benefit from tax relief being added.

Topping up my pension

11 Dec 2019, 22:07

Does anyone know about how much you can add to AVC’s on voluntary redundancy??...

For example if you got 40k could you bring it down to the tax free limit of 30k ie 10k??

Or would you have to leave a leave a little bit over the 30k for National insurance etc?

Is severance pay pensionable like weekly pay?

Can’t seem to get the correct answer....Is Tony about??

Thanks

Topping up my pension

12 Dec 2019, 17:12

Thailand1 wrote:Does anyone know about how much you can add to AVC’s on voluntary redundancy??...

For example if you got 40k could you bring it down to the tax free limit of 30k ie 10k??

In theory you can pay in 100% of your pay into a pension, upto a maximum of £40,000 and get tax relief on it.
That could be into AVC's via your wages, or into a personal pension using your net pay.

In practice not all employers allow VR payments to be paid into their pension scheme or AVC's. To be honest I'm not sure if RM do or not.
But contributions into AVC's are usually only allowed via payroll, so whether that's different in the case of VR, I don't know.
I suggest you get in touch with HR and/or the pensions dept and ask.

Or would you have to leave a leave a little bit over the 30k for National insurance etc?

As far as I know, NIC's are not payable on VR – not even anything over £30k

Is severance pay pensionable like weekly pay?

No it isn't. Not with RM anyway.

Can’t seem to get the correct answer....Is Tony about??

Thanks

A quick google search throws up these links which you might find useful:

https://www.moneyadviceservice.org.uk/e ... ncy-payout
https://www.litrg.org.uk/tax-guides/emp ... y-payments
https://moneytothemasses.com/tax/tax-mi ... cy-payment


Who's Tony?

Topping up my pension

12 Dec 2019, 21:32

Thanks Robert T (Not Tony)......Just to clarify 6% of your Redundancy pay is not added to your pension like normal pay?

Many thanks.

Topping up my pension

13 Dec 2019, 06:57

Thailand1 wrote:Thanks Robert T (Not Tony)......Just to clarify 6% of your Redundancy pay is not added to your pension like normal pay?

Many thanks.

Yes, VR is not pensionable!

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