Defined Benefits Cash Balance Scheme : Buying annuity

[HWalden]

Have any of you recently retired and bought an annuity with the cash balance from your DBCBS? Or are planning to do so. If so did/ does RM require you to seek independent financial advice(IFA) ? I am asking because IFA typically costs £2,000+

[heapsy]

If you have the NRA65, unless you didn't join in time to build up any NRA60, why would you bother? Presumably you have pensions from previous jobs, so is it worth it?

[July 1981]

Have any of you recently retired and bought an annuity with the cash balance from your DBCBS? Or are planning to do so. If so did/ does RM require you to seek independent financial advice(IFA) ? I am asking because IFA typically costs £2,000+

I’m also interested in transferring out my Cash balance to avoid potentially paying tax at the higher rate, I contacted our pension helpline, whilst he was unsure if any financial help was available re: IFA he did suggest speaking to pension wise who provide free Government backed pension advice, the reviews are very mixed.

[HWalden]

I have been in contact with a Royal Mail DBCBS trustee and he has confirmed if your cash balance exceeds £30K you must take advice from an independent financial advisor (IFA) who is qualified in dealing with Defined Benefit schemes ( I think the free Govt advice doesn't meet IFA requirements). I believe this is an unforeseen drawback that has become apparent since the DBCBS was set up and pension contributors have clocked up balances of £30k+. It has occurred because it was assumed that the scheme would only operate for a short period until the new shared responsibility pension was set. Six years after the start of the cash balance scheme it is now hoped that the new shared responsibility pension will be live by the end of the year. There is no suggestion that the accrued cash balances will be moved into the shared responsibility scheme.

So you have three options :-
1) drawdown the cash balance which would incur 20% - 40% income tax after the first 25% is drawn
2) buy an annuity
3) transfer the cash balance to a self invested personal pension (SIPP)

Unfortunately 2) and 3) require you to employ the services of an IFA who must be qualified to manage defined benefit schemes. They are few and far between and are expensive. So with these two options there is a surcharge on accessing your cash balance. The CWU official and pension trustee I have exchanged emails with are aware of this problem and I have entreated them to use their influence in expediting the set up of the shared responsibility pension because further delay will result in more postal workers being caught in the £30K+ trap. I think you will agree with me that Royal Mail pensions are not particularly generous and retiring workers can ill-afford a surcharge on what they do receive from their pensions.
I know this is a long message, but I hope it explains the wider situation.

[heapsy]

A driver from our local MC has just been hit with a tax bill for £6k. All 3 options involve paying tax at some stage.