Collective plan lump sum.

[Wullie10]

I haven't given this collective plan much thought as it's not going to be huge. Ill leave it till 67 , the NRA60 AND NRA65 are my main concerns
What I'd like to know. The collective plan lump sum @67 . Will this be tax free , totally or some of it taxed ?

[mr hil.]

By my calculations the lump sum should be tax free and possibly 100% of the extra lumpsum booster too if you pay that too (no brainer because RM match the amount you put in so free money). Any extra AVCs would probably be subject to the normal 25% tax free but it all depends on your personal circumstances and how much in AVCs you have.

[NWpostie]

The longer you pay into your collective lump sum the better and put in as much as you can afford.

I'm putting £90 into my AVC and opted for 100% growth, high risk but high reward, stock markets usually recover higher than dips in the long term.

* Not financial advice just my experience.

[mr hil.]

I plan to transfer out all three of my AVC/bonus plan to a personal sipp before taking the two pensions at 65 and the cdc at 67.I will also be transferring the DBCBS out too. I hope to totally avoid paying 40% tax on any of my AVC/ DBCBS which from recent conversations with colleagues who didn't transfer out having been hit with large 40% tax deductions that they didn't expect to pay.

I have just asked for a CETV for the DBCBS and will start a thread later once I get the ball rolling to keep anyone interested updated with how it goes. The RM pensions are so convoluted and contain many unforeseen conditions that can easily lock you in to compulsorily taking large taxable lump sums whilst still working and with the 40% higher rate tax threshold being frozen you end up missing out unnecessarily on what should be your hard earned retirement funds.

e.g. taking any DBCBS lump sum at NRA60 ( usually only worth a couple of grand at most) could mean you cannot transfer the remainder out later when you get to NRA65. Because the DBCBS has grown so large due to the delay in starting the CDC many posties will lose out. I have recently been using AI to help with the planning and found a condition imposed that says there are strict time limits as to when need to request a transfer (possibly 18months before NRA65 but I need to verify this independently), if you miss them your stuck paying 40% tax when you could have avoided it. I am still investigating whether what AI said is actually true as it often gets it wrong or only partially right. I will post an update on my journey in a separate thread

[RobertT]

Beware of AI!
It can help but is not always correct.

A quick search of 'when can I transfer my RM Cash Balance fund' throws up a mention of '18 months before Age65', which actually links to the RMSPS website and when you can transfer those benefits.
Whereas the Cash Balance is part of the RMPP and nothing to do with the RMSPS!

In practice, I believe you can request a Cash Balance transfer any time before 65(with reductions).

RM pensions can be very convoluted, not just in how they work with one another, but from a tax point of view as well, particularly in relation to the Cash Balance and AVC's.
How much tax you pay on those often comes down to how you take the main pension(max income or max lump sum), just as much as what other income you may have.

Transferring out may help avoiding tax for some people, but not necessarily for all.
So it's important that everyone looks into all the various options, educates themselves and makes the right choice for them based on their own particular situation and choices. Or else get proper advice if they feel they need it.

[heapsy]

I plan to transfer out all three of my AVC/bonus plan to a personal sipp before taking the two pensions at 65 and the cdc at 67.I will also be transferring the DBCBS out too. I hope to totally avoid paying 40% tax on any of my AVC/ DBCBS which from recent conversations with colleagues who didn't transfer out having been hit with large 40% tax deductions that they didn't expect to pay.

I have just asked for a CETV for the DBCBS and will start a thread later once I get the ball rolling to keep anyone interested updated with how it goes. The RM pensions are so convoluted and contain many unforeseen conditions that can easily lock you in to compulsorily taking large taxable lump sums whilst still working and with the 40% higher rate tax threshold being frozen you end up missing out unnecessarily on what should be your hard earned retirement funds.

e.g. taking any DBCBS lump sum at NRA60 ( usually only worth a couple of grand at most) could mean you cannot transfer the remainder out later when you get to NRA65. Because the DBCBS has grown so large due to the delay in starting the CDC many posties will lose out. I have recently been using AI to help with the planning and found a condition imposed that says there are strict time limits as to when need to request a transfer (possibly 18months before NRA65 but I need to verify this independently), if you miss them your stuck paying 40% tax when you could have avoided it. I am still investigating whether what AI said is actually true as it often gets it wrong or only partially right. I will post an update on my journey in a separate thread

You will only pay 40% tax if you are still working. Unless you have an enormous pension. Also, if you transfer a lump sum such as Cash Balance funds, it then becomes liable for tax in whatever pension you transfer into. Possibly 100% taxed.