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Hopefully Robert could answer this query for me.
I’m in section B and received my Cash Balance Fund quote today alongside my NRA65, could you let me know how they would work out my numbers if I took the maximum lump sum? My cash balance fund quote is 50K and NRA max lump sum circa 25k. Thanks in advance
You're not really giving me much to go on!
Is £50k your total lump sum(inc any that's taxable), the tax free lump sum, or just the DBCBS?
As a section B'er you get a lump sum as standard. If you want the maximum lump sum possible, they then reduce your pension so the total lump sum from the main scheme equals 25%. As a rough guide, each £20 in lump sum reduces the pension by £1.
The DBCBS is then paid out as a UFPLS, meaning the first 25% of that is also tax free, with the remainder classed as income and taxed accordingly.
Sorry Robert for the lack of detail I’ll add more below, the cash balance fund is taking up far too much of my time at the moment, when you speak to the pension help desk they make it seem so simple to transfer it out and get a drawdown, as you’ve said in a previous post getting an IFA to handle a small DB pot is near impossible, although I haven’t given up yet, part of the reason I’m asking the question is to see how bad it will be if I to take the cash balance and pay some tax.
I have already taken NRA 60
NRA pension 2010-12 £900 - Max lump Sum £5700
NRA pension 2012-18 £3278 - Max lump Sum £21859
AVC £5000
Cash Balance Fund £50000 - anything remaining after lump sum will be taxed at 40%, hence my concern.
Your help is much appreciated and the information I get will help me make an informed decision.
If you take your benefits as quoted, I think only 25% of the total DBCBS will be tax free.
The only way to reduce the amount of tax you pay is to either transfer it(which is hard if over £30k) or reduce the amount of the lump sum you take from the main scheme.
It's unclear how much of the lump sum you quote is standard and how much is as a result of commuting some pension. But if you were to convert all of it to pension, I think it would provide very roughly £1,300 more income per year. You can then use the DBCBS to fund the tax free lump sum meaning you're likely to pay less tax on that.
The £5k AVC will just add more to the taxable pot if you take it with NRA65, so it's case of working out if you can pay less tax on that by transferring it. Which should be a much less painful process than with the DBCBS.
Although I've done it with one of mine(I was in C so had both Bonus & Flexi) and the PSC didn't make a great job of it!
Hi Robert, thanks again, If I can’t drawdown which TBH is looking likely, I’ll probably kick the can down the road to next April and not perform any O/T and increase my AVC to the max, this will increase the amount of tax paid at 20%. I’m really frustrated at not being able to drawdown I’m not getting the best out of my pension.
The tax and transfer situation regarding the DBCBS is a result of the RMCPP taking so long to get off the ground. It was only supposed to be a short term transitional scheme but will have been in place for 6.5 years by October.
Plus, the original plan was for it to be 'attached' to all benefits, including those held with the RMSPS, in the same way as AVC's are. RM needed Cabinet Office approval for that, which was declined.
If you take your benefits as quoted, I think only 25% of the total DBCBS will be tax free.
The only way to reduce the amount of tax you pay is to either transfer it(which is hard if over £30k) or reduce the amount of the lump sum you take from the main scheme.
It's unclear how much of the lump sum you quote is standard and how much is as a result of commuting some pension. But if you were to convert all of it to pension, I think it would provide very roughly £1,300 more income per year. You can then use the DBCBS to fund the tax free lump sum meaning you're likely to pay less tax on that.
The £5k AVC will just add more to the taxable pot if you take it with NRA65, so it's case of working out if you can pay less tax on that by transferring it. Which should be a much less painful process than with the DBCBS. Although I've done it with one of mine(I was in C so had both Bonus & Flexi) and the PSC didn't make a great job of it!
Can i ask what was the issue - did it take too long,admin mistake etc etc
It seems PSC standards have been slipping the last year
Although I've done it with one of mine(I was in C so had both Bonus & Flexi) and the PSC didn't make a great job of it!
Can i ask what was the issue - did it take too long,admin mistake etc etc
It seems PSC standards have been slipping the last year
Both!
I was told the transfer would take 3-4 weeks once they had all the info, which was some from myself and some from my personal pension provider.
It actually took 4 months and they didn't do anything about it until after I'd put in a formal complaint, despite phone calls and emails from me in the meantime.
They then made mistakes even after I complained.
Based on the reply I got from my complaint, if they had done everything as quickly as they could have done, it would have gone through within a week!
Personally, I've found the service provided by the PSC to be poor over the last 20 years!
Although I've done it with one of mine(I was in C so had both Bonus & Flexi) and the PSC didn't make a great job of it!
Can i ask what was the issue - did it take too long,admin mistake etc etc
It seems PSC standards have been slipping the last year
Both!
I was told the transfer would take 3-4 weeks once they had all the info, which was some from myself and some from my personal pension provider.
It actually took 4 months and they didn't do anything about it until after I'd put in a formal complaint, despite phone calls and emails from me in the meantime.
They then made mistakes even after I complained.
Based on the reply I got from my complaint, if they had done everything as quickly as they could have done, it would have gone through within a week!
Personally, I've found the service provided by the PSC to be poor over the last 20 years!
Well glad it was all sorted - but sad to see such poor service
I am going through the same experience as you as regards the amount of time it is taking just to get some answers, I have requested to take the lump sum allowance and have filled in all the necessary paperwork, that was back in the middle of January when I took IHR I have phoned, emailed,made a formal complaint and still waiting it seems they think that they are immune from complaint or criticism,I am seriously considering taking legal advice over the length of time they are sitting on MY benefits I hope someone reads this who is a bit of a pensions guru and guide me as to whether this is normal practice from pension fund providers.
I am going through the same experience as you as regards the amount of time it is taking just to get some answers, I have requested to take the lump sum allowance and have filled in all the necessary paperwork, that was back in the middle of January when I took IHR I have phoned, emailed,made a formal complaint and still waiting it seems they think that they are immune from complaint or criticism,I am seriously considering taking legal advice over the length of time they are sitting on MY benefits I hope someone reads this who is a bit of a pensions guru and guide me as to whether this is normal practice from pension fund providers.
The RM pensions people aren't particularly good at their jobs in my opinion and waiting since January is definitely not normal practice.
However if you want a proper answer to your query, you'll need to provide a bit more info please, such as:
How old are you?
Which RM pension scheme are you in?
Which element/s of your pension do you want to take?
Thanks for the reply RobertT my age now is 68 I was on sick leave for 2yrs 6 months when I was eventually offered IHR, I'm in the rmpp I started to take my pension at 55 with lump sum i have worked for RM for 38yrs, the cash balance in rmpp stands at just under £25k that is the element which I wish to take as a lump sum I have been given every excuse under the sun for the delay from there is a backlog of cases and pension advicers being off sick.
I'm still trying to make sense of your situation.....it doesn't make much sense to me!
As you're 68, I assume you've already taken your NRA65 benefits? When did you take them?
For section A, B & C members, the Cash Balance(DBCBS) is part of those benefits, so did you not take that at the same time?
Or have you actually built up DBCBS via section F on the RMPP?
In which case you'll have taken all of your pension(NRA60&65), then got enrolled into the RMDCP for 5 years(and have cash with that), then joined the DBCBS(section F) sometime after 2018?
I plan to take my NRA60 Pension a year early(Feb 25) and use the pension and lump sum to do me for the next 6 years . The plan then is to take the NRA65 when it is due and transfer any AVCs and Cash balance to my SIPP
I notice from one of your previous comments "The only way to reduce the amount of tax you pay is to either transfer it(which is hard if over £30k) or reduce the amount of the lump sum you take from the main scheme."
Can you please clarify how difficult it is to transfer the AVCs and the cash balance to my SIPP?
I know i will have to acquire and IFA which i wont mind doing if im going to save a lot more on tax doing it this way
Transferring AVC's should be straightforward because you're just moving your money from one DC pension scheme to another. I've done it myself and I had to fill in some forms and also get my personal pension provider to send some info to the PSC in Sheffield.
I was told the process would take 3-4 weeks once they had all the info, but it took much longer(4 months) due to the PSC making a complete mess of things.
Hopefully that isn't typical.
If your DBCBS is worth more than £30k you'll need an IFA to transfer it because it's classed as a defined benefit pension.
July1981 is probably in a better situation to advise on this because he's tried to do it himself and has found that not many IFA's are interested in small amounts of money. £50k might be a lot to you, but it's small fry in terms of pension transfers.
Just search his posts for more info.
Transferring the DBCBS isn't just a box ticking exercise!
It needs to be in your best interests, so they'll look at your overall financial position, and it also needs to be worth the while of the IFA, as their charges are often percentage based. The smaller the pot, the less likely they'll be interested.
Personally I would say if you can find an IFA willing to do it then that's the first step, and if they'll do it for less than about £4k, you're doing ok.
