Buy Downs

[dazzer6]

I have been offered a buy down from 39 to 24 hrs at our office, approx £16,000. I am 51 with almost 28 yrs service. I was wondering how it would effect my pension, does the pension still get calculated over the last two years of service, or the whole of service ?
Plus does anyone know of any hidden catches to a buy down ? Also do you get taxed on the lump sum, and lastly do you have to stay at the office you are in for two years after, or can you transfer to another office on the same hours ?
Also does anyone know if the redundancy terms in the MTFS deal will be improved when it gets renegotiated in the next month or two.
I am in two minds whether to take it or not and any help or advice would be greatly appreciated.
Darryl Heywood PDO

[baldrick]

do you get taxed on the lump sum,

You do now get taxed on buy down payment, but I think RM pay half the tax.

do you have to stay at the office you are in for two years after, or can you transfer to another office on the same hours ?

Tranfer on the same grade won't affect your buydown, but if you were to become a Manager you would have to repay some of the buydown payment.

Also does anyone know if the redundancy terms in the MTFS deal will be improved when it gets renegotiated in the next month or two.

Nobody knows. Your guess is as good as anyone's. My guess is that MTSF terms won't be improved, but then I didn't think that RM would give PILON to OPGs again this year.

any help or advice would be greatly appreciated.

I've bumped this post up in case anyone else can help with the first part of your questions, about how buydown would affect your pension.

[Fatboyslim]

As you have 28 years service. You will be in the original NRA60 pension scheme. This closed in 2008. You are now paying into the NRA65 only. As the NRA60 is now closed you cannot add to it. It goes up with inflation yearly.

The 'new' NRA65 is a career defined salary scheme. This will take an hit obviously.

I'm looking at a buy-down. So, I contacted pensions direct. Your NRA is frozen until you decide to draw it. If you call it in at 55. You will take a 25% hit. The NRA65 a 50% hit.

[dazzer6]

Hi thanks for the replies. On the MTFS agreement Appendix 4 ,Paragraph 5.5 it says a buy down won't be taxed unless over 30,000. But in Appendix 3 Paragraph 5.3 it says be paid a taxable lump sum. Not sure which is right, any help would be appreciated.
Darryl.

[baldrick]

Hi thanks for the replies. On the MTFS agreement Appendix 4 ,Paragraph 5.5 it says a buy down won't be taxed unless over 30,000. But in Appendix 3 Paragraph 5.3 it says be paid a taxable lump sum. Not sure which is right, any help would be appreciated.
Darryl.

HMRC decided recently that Buy Down payments are taxable.

[TrueBlueTerrier]

Hi thanks for the replies. On the MTFS agreement Appendix 4 ,Paragraph 5.5 it says a buy down won't be taxed unless over 30,000. But in Appendix 3 Paragraph 5.3 it says be paid a taxable lump sum. Not sure which is right, any help would be appreciated.
Darryl.

HMRC decided recently that Buy Down payments are taxable.

Indeed - The LTB is http://www.royalmailchat.co.uk/communit ... 15&t=65469" onclick="window.open(this.href);return false;

[dazzer6]

Does anyone know how much tax you pay on a buy down is it 25% or 40%.
Thanks for any help
Darryl

[baldrick]

The tax paid depends on your total earnings for the year, including the lump sum payment. If it takes you over the higher tax threshold, which is £42,385 for the 2015/16 tax year you will pay 40% on anything over that threshold.
If your total for the tax year is less than £42,385, you will pay 20%.