Davey Slim wrote:Hi all,
Newbie here - wondering if you guys can give me some advice?
I've just turned 55 and I'm looking at my likely pension and it's not quite where I'd hope it would be. I'm considering using the Flexiplan to try and raise what I'd get annually. Can I get your advice on this? How does one do it?
Take a look at the info on the website, fill in a form and send it off: https://www.royalmailpensionplan.co.uk/ ... n-benefits
If you're in section C, then paying into Bonusplan is a no brainer as that gets extra contributions off RM. Total contributions only amount to £250 per year, with £100 coming from you - not much, but it all adds up.
Does it have to come out of my pay or can I put in lump sump contributions from savings?
You have to pay in via your wages.
There seem to be multiple options, too - any advice on where to invest?
Nobody can really answer that because it depends on your age, attitude to risk, etc. The guide to AVC's on the website gives lots of info on that.
Is there a limit to what I can put in?
Technically you can put in around 85% of your pay, but to take full advantage of the tax breaks, you need to keep within the limits for PSE.
Basically you get tax relief and salary sacrifice(PSE) on every contribution, meaning every £1 gross contribution(the amount on your payslip) only costs £0.68 - your income tax and NIC's get reduced accordingly.
That also applies to your regular pension contributions.
There are threads about PSE limits on here, but basically you can't let your basic pay fall below the minimum wage. This simple sum will give you a good idea of the limits:
Basic RM hourly wage - hourly minimum wage x basic hours worked
Or in money terms for a full timer:
11.62 - 8.72 x 38 = 110.20
And are there any drawbacks or hidden consequences?
The money from your AVC's will generally be used to fund the tax free lump sum when taking your main NRA60/65 benefits, but can be used to purchase an annuity if you choose. However the rates are low and generally aren't particularly good value for money.
Transferring out to another pension arrangement could be an option too.
The main thing to point out is that the ability to pay AVC's may be short lived, as it may not be possible once the new CDC scheme is introduced. That could be within 12 months, so my advice is to pay in while you can.
Going forward, CDC will obviously add more to your pension provision too.
Really any general advice would be much appreciated at this stage, because, as you can tell, I'm a bit lost at sea at the minute. All I know is I'd like to try and maximise my pension while I've still got time to make a difference.
Many thanks in advance.
I hope the above helps.