Lump sum estimate advice

[billyliar1966]

Hi, would like an estimate of my lump sum please. My details are RMSPC- current value pension of £9858 (this includes a supplement of £1305). I am 56 with 35 years service. Would I be right in thinking £50,000 was about right? Please tell me if I am hopelessly wrong! Thankyou.

[heapsy]

Yes. I've got a bit less service than yourself. But not much. I'm looking at slightly lower figures than you, with a lump sum of around £50,500 as it stands. I am paying AVCs, so my figures are gradually increasing. Tbh, I'm hoping from a selfish point that the CDC scheme doesn't come in until April next year. It will mean taking less from the main pension and hopefully I'll have £60k lump sum by the time I get to 60. I'm 56 in a few months.

[charli67]

36 years service, 20 0dd years on night shift. i got £60,000 and £500 a month.

[billyliar1966]

Thankyou for your replies. Is your final pension amount, in my case £9858 then reduced by 25% because of the lump sum. Or is the pension supplement not included in the 25% reduction? I also have £12,000 in an AVC and I am a section c member. Would be grateful of any knowledge as I am far from an expert. Thanks again.

[heapsy]

Thankyou for your replies. Is your final pension amount, in my case £9858 then reduced by 25% because of the lump sum. Or is the pension supplement not included in the 25% reduction? I also have £12,000 in an AVC and I am a section c member. Would be grateful of any knowledge as I am far from an expert. Thanks again.

RobertT says the supplement is included as part of the lump sum. I rang the pension office a while back and they told me it isn't. It is added later. Bob doesn't agree. However, I can't see it being part of the lump sum because it is only a temporary arrangement. It stops at State pension age. I could be wrong here, but I don't think it is actually paid by RM, but by the government. If it was part of the lump sum, it would completely screw any calculations.

[billyliar1966]

Thanks again it is very much appreciated that you have helped.

[RobertT]

RobertT says the supplement is included as part of the lump sum. I rang the pension office a while back and they told me it isn't. It is added later. Bob doesn't agree. However, I can't see it being part of the lump sum because it is only a temporary arrangement. It stops at State pension age. I could be wrong here, but I don't think it is actually paid by RM, but by the government. If it was part of the lump sum, it would completely screw any calculations.

The member guide to benefits says the supplement is included!

My personal experience of the PSC is that you have to be very specific when asking questions. They assume your RM employment status at the time of taking your pension will be the same as at present, which it may not be.
Therefore depending on exact the questions asked, it's possible you may receive a different answer to someone else.

Although the fact we're debating this, means we don't actually know what the definitive answer is.

The pension supplement(only for section C members) was worked out as 1/60th of the Lower Earnings Deduction for each year of employment, and was a way to negate the LED being taken away from actual pay to make pensionable pay.
The same could be said for those who chose to join Bonusplan, with employee payments being worked out as 4.5% of the LED.

The pension supplement is part of the scheme rules for section C members, and comes under the RMSPS and RMPP. It's not paid by the government(although all RMSPS benefits are, for all sections).
Many pension schemes have 'clawback' rules which reduce benefits when reaching SPA, the supplement is our version of that.

[heapsy]

At the time of asking, I asked when calculating the lump sum, was the supplement included? They told me that it wasn't, and was added later.

[RobertT]

But that still doesn't explain why the official guide to the scheme says it is!

One of them must be wrong. Unless it actually depends on your employment status at the time?

So if heapsy membership number 12345, asks if the supplement is included. They will see you're a current employee and the answer might be no. Because they'll assume you'll be taking your pension as an employee and the supplement wouldn't be paid.

But if Joe Bloggs membership number 98765, who's left the company, asks the same question. They'll be able to see he's deferred and might get a different answer.

There isn't necessarily a definitive yes or no answer, as it'll depend on the individual!

[NorthernBoy]

Rob, I think you are correct the confusion is probably to do with whether you are working for RM or not.

The guides says the supplement is included in the lump sum, I am assuming here that the guide default position is that you have left the business and are taking the supplement.

I am working out my my lump sum to include the supplement.

[RobertT]

Another take on the 'is the supplement included or not' debate can be found on this thread from 2021:
viewtopic.php?p=948253#p948253

Hawkey99 asked the pensions dept and this was the reply:

Just got this email reply from Royal Mail pensions.....

"if the supplement is payable at the point of taking the benefits then it would be included in the Capital Value calculation. Therefore if you took your benefits on the same day or if you left employment then applied for the benefits the supplement would be included.

The Capital Value would be the total pension being crystallised (pen + supp) multiplied by 20, plus any lump sums (DBCBS fund)"