Pension help

[Hitcher]

Thanks to RobertT I think I now have a better understanding of the various RM pensions I've accrued over the last 20 years but would appreciate some confirmation.

Here's my 2 latest statements for RMSPS & RMPP:

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When I take my NRA60 (RMSPS only) I'll get £1788.29 per year until I'm 67 when it will drop to £1585.56 per year.

When I take my NRA65 (RMSPS & RMPP) I'll get an £2914.13 per year until I'm 67 when it will drop to £1497.40 per year.

I'll also have a lump sum from the Age65 Cash Balance fund of £24922.

Is that correct?

Thanks.

[Chelseablue]

Following,,,

[RobertT]

Thanks to RobertT I think I now have a better understanding of the various RM pensions I've accrued over the last 20 years but would appreciate some confirmation.

When I take my NRA60 (RMSPS only) I'll get £1788.29 per year until I'm 67 when it will drop to £1585.56 per year.

When I take my NRA65 (RMSPS & RMPP) I'll get an £2914.13 per year until I'm 67 when it will drop to £1497.40 per year.

I'll also have a lump sum from the Age65 Cash Balance fund of £24922.

Is that correct?

Thanks.

Your Age60 figures are correct, but Age65 would be £2,914 per year and then dropping to £2,500.
Bearing in mind the supplement is only paid if you've left RM employment and then stops at state pension age, and assuming you're taking your benefits at 60 and 65.

Do you have the choice to take them earlier but they will be reduced by roughly 5% per year before NRA.
You also have the option to give up some pension to provide a lump sum.

The Cash Balance(DBCBS) is usually used to fund the lump sum with Age65 benefits. Some of which will be tax free.

The statements really aren't that difficult to understand, as all you need to do is add your Age60 figures together to get the pension you'll get at 60 and the same with Age65 at 65.

The problems start if you want to take them early and that's where a bit of maths is required. Luckily, as long as you're around 3 months short of your 55th birthday or older, you can ask the pensions people for a no obligation quote to give you an idea of how much you'll get if taken before NRA.

[goldy2007]

Is the RMSPS NRA65 tax free lump sum calculated the same as NRA 60

Annual pension x20 divided by 4

You would then add to to a 1/4 of age 65 cash balance fund to get full 65 benefits tax free lump sum

[RobertT]

You have two options:

1. Fund the tax free lump sum by giving up some pension in which case it's pension x 20 / 4. The Cash Balance(DBCBS) is then paid out as a UFPLS meaning the 1st 25% is also tax free.
2. Use the DBCBS to fund the tax free cash. The maths for that is pension x 20 / 3 which gives you how much of the DBCBS is tax free, with the remainder being paid as a UFPLS.

It's important to realise the DBCBS is specifically attached to RMPP Age65 benefits, that's the pension you accrued 2012-2018.
Although in some cases a small amount may be payable with Age60, as the RMPP are responsible for paying some inflationary increases on RMSPS benefits.

UFPLS – Uncrystalised Funds Pension Lump Sum.

[Hitcher]

Your Age60 figures are correct, but Age65 would be £2,914 per year and then dropping to £2,500.
Bearing in mind the supplement is only paid if you've left RM employment and then stops at state pension age, and assuming you're taking your benefits at 60 and 65.

Do you have the choice to take them earlier but they will be reduced by roughly 5% per year before NRA.
You also have the option to give up some pension to provide a lump sum.

The Cash Balance(DBCBS) is usually used to fund the lump sum with Age65 benefits. Some of which will be tax free.

The statements really aren't that difficult to understand, as all you need to do is add your Age60 figures together to get the pension you'll get at 60 and the same with Age65 at 65.

The problems start if you want to take them early and that's where a bit of maths is required. Luckily, as long as you're around 3 months short of your 55th birthday or older, you can ask the pensions people for a no obligation quote to give you an idea of how much you'll get if taken before NRA.

Forgot about the supplements only being payable if you leave. Why is this exactly? Seems odd you'll get more for leaving the company!

Anyway here's what I think I'll get now if I stay until at least 65.

Age 60
RMSPS = £1585.56

Age 65
RMSPS = £693.97
RMPP = £1776

Total = £4055.53

Lump Sum = £24922

Age 67

RMCPP = £2630 (quotation)

Total = £6685.53

Lump Sum = £12770 (quotation)

I assume the pension payments rise inline with the RPI?

[RobertT]

I'm not really sure why the supplement is only payable if you've left RM to be honest. It's just the rules of the scheme.

As you're section C, your RMPP and RMSPS benefits will rise with RPI while you're still employed by the company and while in payment. But if you leave before taking them, it'll be CPI while you're deferred.
Both are capped at 5% per year.

Annual inflationary increases are targetted for the RMCPP(Age67) pension, but your income can go up or down depending on the performance of the investments.

[Hitcher]

Thanks Robert, you've been a great help.