Age 65 Cash Balance fund Question

[Edward Hunter]

On my pension statement it says "Age 65 Cash Balance Fund at 31 March 2025 = £35,500"
My question is : Is that the total I can expect at 65 if i continue paying in for another 5 years (I'm currently 60)
Or is that the total as it stands now and will increase in due course?
Also will the payment be tax free? TIA

[RobertT]

The RMPP closed in October 2024, therefore you stopped paying into the Cash Balance(CB) at that point.
I assume you've been paying into the collective scheme(RMCPP) since?

Your RMPP statements show what the CB is worth as of 31 March each year.

RM are responsible for increases to the CB and their aim is to uplift it by at least the rate of CPI inflation.
Increases are added each April, based on CPI the previous September.

You'll be given options at the point of taking your Age65 benefits, which means the amount that's tax free will vary depending on which option you choose and also which section you're in.
But anyone who paid into the CB for the full 6.5 years it was open(2018-2024) can expect the taxman to take his cut.

[Gary55]

Must the cash balance be taken as a lump sum or can some or all.be used to increase age 65 payments as with the age 60 benefits. If not what is the best strategy to avoid paying too much tax thanks

[RobertT]

The Cash Balance can't be used to increase Age60 or Age65 pension payments.
But if you're in section A/B you can use some or all of your standard lump sum to provide more pension, and so use the CB to provide the lump sum instead.

Otherwise, if you want more income you can transfer out and buy an annuity, pending the £30k advice rules.

In practice, the CB can only be used to fund the tax free cash when taking other RMPP benefits - so that's RMPP Age65(2012-2018) and any RMPP Age60 benefits you may have.
It can't be used to fund any lump sum associated with RMSPS benefits or any other RM pension.

Therefore it's a very tax inefficient scheme and most people will probably end up giving a chunk to HMRC.

I'm not sure if there is a 'best strategy' to avoid tax, because everyone will be in a slightly different position. But in very basic terms, the less income you have in a particular financial year, the less tax you'll pay. So you'll need to factor in all your wages, pension and the CB when working out your tax liability. Bearing in mind the tax free elements of pensions(inc the CB) don't count towards your income.

[Gary55]

Very helpful thanks Robert

[NWpostie]

The Cash Balance can't be used to increase Age60 or Age65 pension payments.
But if you're in section A/B you can use some or all of your standard lump sum to provide more pension, and so use the CB to provide the lump sum instead.

Otherwise, if you want more income you can transfer out and buy an annuity, pending the £30k advice rules.

In practice, the CB can only be used to fund the tax free cash when taking other RMPP benefits - so that's RMPP Age65(2012-2018) and any RMPP Age60 benefits you may have.
It can't be used to fund any lump sum associated with RMSPS benefits or any other RM pension.

Therefore it's a very tax inefficient scheme and most people will probably end up giving a chunk to HMRC.

I'm not sure if there is a 'best strategy' to avoid tax, because everyone will be in a slightly different position. But in very basic terms, the less income you have in a particular financial year, the less tax you'll pay. So you'll need to factor in all your wages, pension and the CB when working out your tax liability. Bearing in mind the tax free elements of pensions(inc the CB) don't count towards your income.

That's what I thought about my NRA 60 and 65, I plan to take them separately to stagger my tax liability when due not together.