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If I take my DBCBS at 60 will it be reduced by 25%

02 Apr 2020, 07:27

As the subject header.
I will have accured, up till April this year £5700 x 2.
If I take it at 60, will I lose 25% of this for early payment and pro rata for any extra months.
(if this is the case, fingers crossed the DBCBS will run till Nov 2020 and that will at least pay for the reduction!)
Last edited by stephen500 on 11 Apr 2020, 08:35, edited 1 time in total.

If I take my DBCBS at 60 will it be reduced by 25% A question not an answer - still no answer to this question

09 Apr 2020, 08:12

have a look at this, when can I take my benefits

https://www.royalmailpensionplan.co.uk/ ... s-answered

If I take my DBCBS at 60 will it be reduced by 25% A question not an answer - still no answer to this question

09 Apr 2020, 08:23

mrcurve wrote:have a look at this, when can I take my benefits

https://www.royalmailpensionplan.co.uk/ ... s-answered

Thanks, I did spot that, but where as I am expecting a reduction of 5% per year for taking my CSDB pension at 60, I am not sure the reduction for the DBCBS will be 5% per year as it is cash?
I spoke to a trustee yesterday, who did not know how much. But I am going to presume it is 5% per year and make a 25% reduction in my head.

If I take my DBCBS at 60 will it be reduced by 25% A question not an answer - still no answer to this question

09 Apr 2020, 09:36

Slightly off topic here, but related to the Cash Balance issue. The longer we pay into the Cash Balance scheme the trickier the situation might become. Many of us are middle aged and therefore have fewer years to build up a pension in the CDC scheme RM want to introduce. Some may not want to work to 67, having completed 30+ years already. There is a possibility that the Cash Balances scheme may be worth more than the actual pension element. This will mean that the lump sum will be taxed. It all depends on how long the introduction of the new pension takes. Tbh, I think it will be another 2 years at least before we see it come in. With the new scheme being stock market based, this could be a reality for some.

If I take my DBCBS at 60 will it be reduced by 25% A question not an answer - still no answer to this question

09 Apr 2020, 15:03

If we look at the worst case scenario and we will pay into this cash balance fund for another 2 years then it will be worth over £20K which will be worth way more that 25% of my NRA65 pension. Surely we can't pay tax on this lump sum just because the new CDC scheme has been delayed going through parliament.

If I take my DBCBS at 60 will it be reduced by 25% A question not an answer - still no answer to this question

09 Apr 2020, 15:50

Steve_claret wrote:If we look at the worst case scenario and we will pay into this cash balance fund for another 2 years then it will be worth over £20K which will be worth way more that 25% of my NRA65 pension. Surely we can't pay tax on this lump sum just because the new CDC scheme has been delayed going through parliament.

I spoke to Lionel Sampson (CWU RMPP trustee) yesterday and I am doing this from memory.
But from memory, he told me that in his opinion that he does not expect the CDC scheme to come in till at least 2021 and that was before Covid (Corona virus).
I personally am happy that it will still be in, in Nov 2020 as I do not want to enter a new scheme for a few months at best, just as I am about to retire.
I realise that the CDC scheme is a pension and perhaps better than a lump sum, however I am glad I am not in it at present.
How much of the CDC scheme would have been invested in stock markets? One listener on the radio, stated that his pension fund had reduced by 40% due to turmoil in the markets and if he had to buy an annunity now, he would be stuffed and remember as far as CDC schemes are concerned, they can go DOWN in payment (I am guessing they can go up as well or at least reach their original base level).
As for paying tax on your lump sum, yes that will depend on how long we are in the DBCBS for.
Lionel Sampson told me, he does not know any one who has paid tax on his/her lump sum. But in my opinion the longer we are in the temp scheme, the more chance of this.
In fact I estimate I will pay some tax.
My calculations.
£10515 (combined FS and Csdb) Csdb reduced by 25% for early payment) x 20 + Max lump sums £55,000 FS+ £14000 CSDB + £12312 DBCBS (I deducted 25% for taking 5 years early?)
Pot = £291,612 Tax free allowance of 25% =£72903 Actual max lump sum £81312 (tax due on £8409 at 20% £1681) so new max lump sums and DBCBS = £79631.
So with 2 years and 10 months in the DBCBS and as a section B member of FS scheme (27 years in FS scheme) I pay tax of £1681) If I did not retire, then for each further year I was in the cash balance scheme, I would be liable to another £1180 tax. But bear in mind I am section B and I have full night allowance and ex PHG allowance.
So I doubt postmen on Days or those not on full night allowance would pay this.

If I take my DBCBS at 60 will it be reduced by 25% A question not an answer - still no answer to this question

10 Apr 2020, 00:29

Hi Stephen, I’m not sure your calcs are right mate. You say maximum lump sum of £55k..... but you are working out your pension pot to find the maximum lump sum aren’t you?
Not all the night shift allowance is pensionable either, only the equivalent to late shift allowance is pensionable which is about £40ish if memory serves.... hope I'm wrong but I have a nasty feeling your pension pot is about 20k out and not in your favour...... like I say I hope I’m wrong.
It’s not easy to work out exactly what you will get in Section B because you already get a lump sum automatically so bearing in mind that one of the main attractions of the interim cash fund is to fund the lump sum for Section C contributors who would then not have to lose some of their yearly pension to create the lump sum. This is not the case for your good self. I think what might happen is that the lump sum you get automatically would be converted into additional yearly pension and the cash fund would then replace the original lump sum. Anything left over in the cash fund (bearing in mind that we are only talking about the pension generated from 2012 until 2018) would then be taxed at your nominal rate and added to you maximum lump sum.
I may be talking completely out of my hat on this ........ we need the sage wisdom of RobertT....... Bobby what say you?

If I take my DBCBS at 60 will it be reduced by 25% A question not an answer - still no answer to this question

10 Apr 2020, 01:07

The way I would work it out is.....
From your last pension statement Take your yearly pension figures and add together (minus 25% of the nra 65) then multiply by 1.024 (the rise in the pension for the last year) then multiply by 23 and divide by 4 to find the maximum lump sum..... this is where it gets tricky :crazy: :crazy: the cash fund...... to find the maximum lump sum for years 2012 to 2018 take the csdb yearly pension and multiply by 0.6 then multiply by 23 and divide by 4........ subtract this figure from cash fund (which has been reduced by 25%) and add it to the remain total pension pot. Any remaining balance in the cash fund is then taxed at your nominal rate and added to the maximum lump sum.
The new total pension pot is divided by 20 to give your yearly pension.
The upshot of it is that for Section B members you don’t get much from the cash fund to increase your lump sum apart from the taxed remainder. The cash fund gives you a slightly larger yearly pension.
I know !!! As clear as mud!! :arrrghhh :arrrghhh

If I take my DBCBS at 60 will it be reduced by 25% A question not an answer - still no answer to this question

10 Apr 2020, 01:10

My night allowance is fully pensionable as an ex phg under the way forward agreement and continues to be so until I choose to leave my night shift. I have had night allowance fully pensionable for around 21 years. My ex PHG supplement is fully pensionable as well. My section B final salary scheme already pays out £29,000 as a min lump sum and my pension without deduction for the max lump sum is £9700. I have taken off 15% for the max lump sum and will get about £8400. My max lump sum will be around £55,0000. For the csdb pension I am due to get £3700 per year but I have reduced that for taking it 5 years early by 42% (16% for the max lump sum and 25% for the five year deduction) that gives me an csdb yearly pension of £2146 and a min lump sum of £6438 and a max lump of prob around £12000. My cash balance scheme according to my illustration on year 1 was £5750 (night allowance fully pensionable , I can show you my pay slip) we have had that for 2 years so far, so that is £11500 till April and pro rata for next 10 months nearly another £5000. Section B is different to section C and my pay is defiantly fully pensionable , when I get home I will post my pay slip here . I am confident my calculations are correct, I have 43 years of pension illustrations and know what my fellow night ex phgs have received as max lump sum and none of them have had less than £52000 and that a just for the final salary.

If I take my DBCBS at 60 will it be reduced by 25% A question not an answer - still no answer to this question

10 Apr 2020, 01:14

renrag40 wrote:The way I would work it out is.....
From your last pension statement Take your yearly pension figures and add together (minus 25% of the nra 65) then multiply by 1.024 (the rise in the pension for the last year) then multiply by 23 and divide by 4 to find the maximum lump sum..... this is where it gets tricky :crazy: :crazy: the cash fund...... to find the maximum lump sum for years 2012 to 2018 take the csdb yearly pension and multiply by 0.6 then multiply by 23 and divide by 4........ subtract this figure from cash fund (which has been reduced by 25%) and add it to the remain total pension pot. Any remaining balance in the cash fund is then taxed at your nominal rate and added to the maximum lump sum.
The new total pension pot is divided by 20 to give your yearly pension.
The upshot of it is that for Section B members you don’t get much from the cash fund to increase your lump sum apart from the taxed remainder. The cash fund gives you a slightly larger yearly pension.
I know !!! As clear as mud!! :arrrghhh :arrrghhh

See my reply. I am grateful for your reply but my night allowance is fully pensionable ,see my post after or before this

If I take my DBCBS at 60 will it be reduced by 25% A question not an answer - still no answer to this question

10 Apr 2020, 01:16

Yes but you don’t add the maximum lump sum to the pension pot you add the minimum lump sum.... surely..... otherwise you are getting a maximum maximum lump sum aren’t you?

If I take my DBCBS at 60 will it be reduced by 25% A question not an answer - still no answer to this question

10 Apr 2020, 01:26

You don’t have to post your pay slip Stephen...... grandfather rights is the answer.
But I am right about adding the standard lump sum to the total pension pot. I fear you are over estimating your maximum lump sum by 5 to 6,000. Like I say, I hope your right and I’m wrong. I didn’t mean to cause you any offence...... if I have I apologise.

If I take my DBCBS at 60 will it be reduced by 25% A question not an answer - still no answer to this question

10 Apr 2020, 01:31

renrag40 wrote:Yes but you don’t add the maximum lump sum to the pension pot you add the minimum lump sum.... surely..... otherwise you are getting a maximum maximum lump sum aren’t you?
I know my first max lump sum is a min of £53000 as the old illustrations told me that before they stopped showing them. That was shown as the max tax free lump sum I could take from the FS scheme section B
Last edited by stephen500 on 10 Apr 2020, 01:35, edited 1 time in total.

If I take my DBCBS at 60 will it be reduced by 25% A question not an answer - still no answer to this question

10 Apr 2020, 01:33

Ps...... I’m in Section B but have only served a 35 year sentence.

If I take my DBCBS at 60 will it be reduced by 25% A question not an answer - still no answer to this question

10 Apr 2020, 01:37

renrag40 wrote:You don’t have to post your pay slip Stephen...... grandfather rights is the answer.
But I am right about adding the standard lump sum to the total pension pot. I fear you are over estimating your maximum lump sum by 5 to 6,000. Like I say, I hope your right and I’m wrong. I didn’t mean to cause you any offence...... if I have I apologise.
No offence taken and if I was out by £6000 that would be fine and I do t say that glibly ! For illustration in the morning I will show you my pension illustrations over the years. My csdb currently stands at £12000 min lump sum

If I take my DBCBS at 60 will it be reduced by 25% A question not an answer - still no answer to this question

10 Apr 2020, 02:04

It’s alright Steph.... I trust you mate :thumbup
The complexity of it, is all the changes that have been forced on the members since 2008 which means you have to do all sorts of side calculations to get to the final figure....... then to put a feathered hat on it they add in the cash fund that is only for years 2012 to 2018 and there to provide a lump sum which you are already due to receive.
Having said that I’m like you, I would be quite happy for the cash fund to carry on...... as recent events have shown ....what use is a yearly pension when you could be fighting for breathe on a ventilator in a weeks time?.....I’m a happy sod me :Very Happy
I’m giving it some careful thought to taking the 2012 onwards pension as a transfer value and putting it in a SIPP..... at least the cash would be there to pass on to the family...... Mulling over whether I want the hassle of the investment decisions that go with it...... have you looked at this option Steph?
Ps..... Still can’t get over that you think Amazon should pay their fair share of taxes...... not in either of our life times!

If I take my DBCBS at 60 will it be reduced by 25% A question not an answer - still no answer to this question

10 Apr 2020, 02:10

renrag40 wrote:It’s alright Steph.... I trust you mate :thumbup
The complexity of it, is all the changes that have been forced on the members since 2008 which means you have to do all sorts of side calculations to get to the final figure....... then to put a feathered hat on it they add in the cash fund that is only for years 2012 to 2018 and there to provide a lump sum which you are already due to receive.
Having said that I’m like you, I would be quite happy for the cash fund to carry on...... as recent events have shown ....what use is a yearly pension when you could be fighting for breathe on a ventilator in a weeks time?.....I’m a happy sod me :Very Happy
I’m giving it some careful thought to taking the 2012 onwards pension as a transfer value and putting it in a SIPP..... at least the cash would be there to pass on to the family...... Mulling over whether I want the hassle of the investment decisions that go with it...... have you looked at this option Steph?
Ps..... Still can’t get over that you think Amazon should pay their fair share of taxes...... not in either of our life times!
I will be happy as long as I get £68000 max lumps, first max should be min of £50 k and csdb £12 k, so that gives me £62k max lump sum as min. Just need to other £12 k cash bal scheme to be worth £6 k in cash terms to bring to £68k any thing else is a bonus

If I take my DBCBS at 60 will it be reduced by 25% A question not an answer - still no answer to this question

10 Apr 2020, 02:43

Steph, I’ve just crunched the numbers the way I would work it out and come to....... now don’t bite my head off.....
Lump sum of £74,500.
Yearly pension of £11,180.
Monthly pension of £930.
When you get your pension estimate I would be fascinated to know how accurate the above is...... if only so I know I’m on the right lines to working it out for my own in about 4 years or whether it’s back to the drawing board.
Keep safe Stephie lad.

If I take my DBCBS at 60 will it be reduced by 25% A question not an answer - still no answer to this question

10 Apr 2020, 03:00

renrag40 wrote:Steph, I’ve just crunched the numbers the way I would work it out and come to....... now don’t bite my head off.....
Lump sum of £74,500.
Yearly pension of £11,180.
Monthly pension of £930.
When you get your pension estimate I would be fascinated to know how accurate the above is...... if only so I know I’m on the right lines to working it out for my own in about 4 years or whether it’s back to the drawing board.
Keep safe Stephie lad.
if you are right, I would be more than happy. I think I will get at least £50 k fs sec B, csdb £12 k and I am not sure how it is worked in and How much tax I may pay, but around £12 k cash bal scheme. Making the £74 k you say and you have yearly a bit higher. Happy if both you and I are right. My aim £10k pension and out of lump sum 68k divided by 6 years and 10 months to give me £10k per year to add to my pension giving me £20k a year till my state pension.

If I take my DBCBS at 60 will it be reduced by 25% A question not an answer - still no answer to this question

10 Apr 2020, 09:47

Sounds like a good plan to me.

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