RMDCP & MPAA

[ihatedogs]

One for Robert I think. Planning on taking my RMDCP pension & joining the new one.
If I do this can I pay the £10000 maximum payable into the new pension in this tax year or is my existing pension somehow taken into account?
Got five years to retirement & planning to get six years of the maximum into the new pension by virtue of my birthday being in the middle of the tax year.
Cheers.

[RobertT]

You can normally pay as much as you earn into pensions per year and receive tax relief, up to a maximum of £60k.

If you take any taxable amount from a DC scheme, you'll trigger the Money Purchase Annual Allowance(MPAA) and the limit for contributing into DC schemes(inc from employers) then goes down to £10k.

The pension element of the RMCPP is DC, so that is relevant to you.

There is a section on the RMCPP website(via the Save & Boost menu) which says you have to contact them if you've already done that, so it's not a bad idea to tell them of your intentions.

[ihatedogs]

Thanks for the reply Robert.
Can I pay a full £10k into the new pension in the next seven months i.e. in this tax year?
RMCPP, do you mean RMPP? And could you link me to " save & boost" I can't seem to find it.
Thanks again.

[RobertT]

Thanks for the reply Robert.
Can I pay a full £10k into the new pension in the next seven months i.e. in this tax year?

Once you've triggered the MPAA, you then have a £10k DC limit for the whole tax year.
https://www.unbiased.co.uk/discover/pen ... wance-mpaa

It's also worth noting for anyone not reading the link above, you have an obligation to tell all pension schemes you're contributing to that you've triggered the MPAA.

The pension element of the RMCPP is DC and the lump sum is DB, so that needs to be factored in when working out how much of your annual £10k allowance you're using up.

RMCPP, do you mean RMPP? And could you link me to " save & boost" I can't seem to find it.
Thanks again.

The Royal Mail Collective Pension Plan(RMCPP) is the new scheme starting in October.

Doesn't the info you've received include the website address?
It doesn't like being linked to(it's in the t's & c's), but it's: rmcollectiveplan dot com

[ihatedogs]

Thanks for the reply Robert.
Can I pay a full £10k into the new pension in the next seven months i.e. in this tax year?

Once you've triggered the MPAA, you then have a £10k DC limit for the whole tax year.
https://www.unbiased.co.uk/discover/pen ... wance-mpaa

It's also worth noting for anyone not reading the link above, you have an obligation to tell all pension schemes you're contributing to that you've triggered the MPAA.

The pension element of the RMCPP is DC and the lump sum is DB, so that needs to be factored in when working out how much of your annual £10k allowance you're using up.

RMCPP, do you mean RMPP? And could you link me to " save & boost" I can't seem to find it.
Thanks again.

The Royal Mail Collective Pension Plan(RMCPP) is the new scheme starting in October.

Doesn't the info you've received include the website address?
It doesn't like being linked to(it's in the t's & c's), but it's: rmcollectiveplan dot com

If I trigger the MPAA now does that £10k a year include what's already gone into my RMDCP this tax year?
And thank you for the web address.

[RobertT]

If I trigger the MPAA now does that £10k a year include what's already gone into my RMDCP this tax year?
And thank you for the web address.

I think it best to ignore the example in the link I posted above – it's a bit confusing. It confused my anyway!
This is a better link: https://www.fidelity.co.uk/media/PI%20U ... tsheet.pdf

To clarify:
The amount you pay into pensions up to the trigger date, isn't included in the figures, it's only what you pay in afterwards, as long as the total isn't more than £60k.
So you could still pay in up to £10k after the trigger date, and each tax year thereafter.

Sorry for any confusion.

[ihatedogs]

If I trigger the MPAA now does that £10k a year include what's already gone into my RMDCP this tax year?
And thank you for the web address.

I think it best to ignore the example in the link I posted above – it's a bit confusing. It confused my anyway!
This is a better link: https://www.fidelity.co.uk/media/PI%20U ... tsheet.pdf

To clarify:
The amount you pay into pensions up to the trigger date, isn't included in the figures, it's only what you pay in afterwards, as long as the total isn't more than £60k.
So you could still pay in up to £10k after the trigger date, and each tax year thereafter.

Sorry for any confusion.

Thanks very much for this mate, very helpful.

[mr hil.]

Thanks for the question and answers, I was just pondering the very same thing.

So by my reckoning the maximum you can pay into the new pension weekly to keep below the £10,000 limit would be about £192. This includes RM contributions too. So anyone thinking of paying AVCs too should take this into account.

How much as a percentage of the weekly 6% employee and 13.3% RM contributions would be allocated to the Lump Sum?
Also would the Lump Sum Booster amounts have to be included in the MPAA calculations?

The lump sum percentages are 2% employee and 2.1% RM (4.1% Total) so only 15.2% of your pensionable pay should be used in calculations regarding MPAA

[July 1981]

I’m slightly confused, my basic pay is £602 with an £18 shift allowance, on my pay slip on right hand side at the top shows pension contributional pay as £673, can anyone explain? I’m also keen to put 10K per year into my pension but don’t want to fall foul of the rules.

[RobertT]

Also would the Lump Sum Booster amounts have to be included in the MPAA calculations?

The booster scheme increases the lump sum element of the RMCPP, which is DB. So I doubt it.

[RobertT]

I’m slightly confused, my basic pay is £602 with an £18 shift allowance, on my pay slip on right hand side at the top shows pension contributional pay as £673, can anyone explain?

Probably as a result of the 2014 changes that de-linked pensionable pay from actual pay for RMPP section A, B & C members.

I’m also keen to put 10K per year into my pension but don’t want to fall foul of the rules.

The £10k pension contribution rule only applies if you've triggered the MPAA. You do that by accessing any taxable element of a Defined Contribution pension scheme, otherwise you can contribute(inc employer payments) as much as you earn into pensions, up to a maximum of £60k.

[July 1981]

Thanks Robert, I have recently completed my NRA 65 paperwork and there’s a section in there re: MPAA and I was concerned that the Cash Balance Fund might trigger this.

[RobertT]

Thanks Robert, I have recently completed my NRA 65 paperwork and there’s a section in there re: MPAA and I was concerned that the Cash Balance Fund might trigger this.

The Cash Balance is a DB scheme, so the MPAA wouldn't apply when taking it with NRA65.

But if you were to transfer that money out to a personal pension, you would trigger it when you accessed anything above the 25% tax free amount, because all personal pensions are DC schemes.

[Danma]

Thanks Robert, I have recently completed my NRA 65 paperwork and there’s a section in there re: MPAA and I was concerned that the Cash Balance Fund might trigger this.

Sorry to butt in but if you take part of your cash balance as an UFPLS which is a taxable lump sum, it will trigger MPAA

[RobertT]

Thanks Robert, I have recently completed my NRA 65 paperwork and there’s a section in there re: MPAA and I was concerned that the Cash Balance Fund might trigger this.

Sorry to butt in but if you take part of your cash balance as an UFPLS which is a taxable lump sum, it will trigger MPAA

You could well be correct.