Rmdcp Vs dbcbs

[rambo1]

And if it is taxable, if you can only take 25% tax free, how do you draw down the rest? Do you have to buy an annuity or transfer the pot into a sipp or something. So basically, whatever royal mail weekly pension benefits you have built up until April, will only grow with inflation and the new scheme is basically a savings account that royal mail pay into as well, and whenever you retire, thats yer lump sum and there will be no more. Is this correct?

[RobertT]

This dbcbs lump sum, is it taxable and can you get it at 55 when you retire at 55. Obviously the longer you pay into it the bigger then lump sum will become. ????

The idea is that your DBCBS pot will fund your tax free lump sum when you take your NRA60 or NRA65 benefits. If you take your benefits earlier then I assume your pot of money would be reduced accordingly.
You cannot take your DBCBS pot separately from your NRA60 and NRA65.

And if it is taxable, if you can only take 25% tax free, how do you draw down the rest? Do you have to buy an annuity or transfer the pot into a sipp or something. So basically, whatever royal mail weekly pension benefits you have built up until April, will only grow with inflation and the new scheme is basically a savings account that royal mail pay into as well, and whenever you retire, thats yer lump sum and there will be no more. Is this correct?

You can take 25% of your total RM pension benefits tax free, so that includes NRA60, NRA65, AVC’s and now the DBCBS all added together. The government needs to approve the linking of the DBCBS to pre 2012 benefits(the RMSPS-the part the government took over). Otherwise it will only be linked to post 2012 benefits(RMPP). See page 10 of booklet for more info.

Any cash that’s left over after you’ve taken the maximum 25% tax free, can either be taken as taxable cash, transferred to another pension arrangement for drawdown or annuity purchase.

The DBCBS is basically a savings account aimed at providing some or all of your tax free lump sum, you are not building up any more pension!

[rambo1]

Not building up any more pension is a pretty big deal. Do all posties know this is what is actually going to happen?

[nataddick]

Robert, as always a valuable insight and informed opinion on this ‘now’ issue.

Personally and I appreciate I am much closer to retirement (post 60) than most RMPP members, it is a no brainer to opt for DBCBS. In fact, I would be more than happy to stay in the DBCBS until I elect to retire, given the relatively short time horizon left and the additional cash top-up into my RMPP pension plus AVC pot via the RMPP link !

Whether this very viable short-term option is actually available is somewhat ‘clouded’ in the latest booklet. There are loads of ifs, buts and maybe’s in the latest booklet particularly, post transition and I wonder if the CWU have fully addressed these issues on behalf of their members in the rush to agree the new ‘in principle’ CDC scheme that still remains on the distant horizon ?

As Fish mentions and I eluded to in my earlier post, it is not clear whether the option to choose DBCBS now sets members on a flight path to CDC forever, without a life jacket. It is one of many questions I have drafted in my critique of the booklet to RM Pensions. I remain unconvinced that the CWU understand that the vast majority of it’s members will need the freedom to access flexible retirement options, given the physical demands of the job.

For me, the path is DBCBS until retirement (if CDC fails to take off) or DBCBS until the transition ends, followed by RMDCP until retirement, if any of these options exist. Then again, I might need to review the booklet for Plan B, if CDC becomes a non-starter.

Fred Karno’s Army.

[fishtank]

The future of the RMDCP scheme has in my opinion been deliberately left vague because RM does not have the confidence to nail its colours to the mast.

The pension booklet gives the "impression" that it may close along with the DBCBS if the CDC scheme ever arrives but it makes no explicit announcement. I think their plan is to get as many people as possible out and into the DBCBS before fully addressing the issue.

An official explicit announcement is necessary as closing the DC scheme will trigger another consultation period and that's going to be an interesting case. Unless there are significant additional costs in keeping both schemes open justification for closing it if a significant number want to remain in the scheme might be difficult.

[rambo1]

DBCBS benefits in the RMPP from 1 April 2018 you do not need to do
anything. This will happen automatically on 1 April 2018.

If you would prefer to opt out of the DBCBS and join the RMDCP, please complete the ‘Joining RMDCP’

Which one is offers the best Pension i have 27 years service do I stay in the RMPP or join the RMDCP not what to do ?

Neither the DBCBS or the RMDCP offers a pension as such – with both schemes all you’re doing is building up a pot of money!

Most current RMPP members are in section C and don’t get a lump sum as standard, but most choose to give up some pension to get a lump sum, of up to 25% of the value of their benefits.

The DBCBS will be part of the RMPP and will provide a ‘cash balance’ so you don’t have to give up as much pension or possibly no pension at all to get a lump sum. Therefore you don’t actually build up any more pension from 1st April 2018, but you will get to keep more of the pension you accrued before that date.

The RMDCP is separate from the RMPP and is basically the same as a personal pension but you have the benefit of contributions off RM too. It will not have an NRA other than the legal minimum age of 55 and all it does is provide you with a pot of money with which you have different options. This gives more info: https://www.moneyadviceservice.org.uk/e ... on-schemes" onclick="window.open(this.href);return false;

Personally and in general I think the DBCBS is the best option for most people already in the RMPP(sections A, B &C) because you’re making the most of the benefits you’ve already built up. And you’ll be getting a larger income for the rest of your life.

Whereas the RMDCP is a completely different concept altogether which provides more flexibility, but if you want it to provide a lifetime income via an annuity, the returns are likely to be lower.

You'll only be getting a larger income for the rest of your life, if you were thinking of taking a lump sum. If you have no need for the lump sum, your rest of life pension would still be the same.

[mitchelbean]

The DBCBS is basically a savings account aimed at providing some or all of your tax free lump sum, you are not building up any more pension!

Thanks. I hadn't realised this at first.

On page 21, where it compares annual retirement incomes and lump sums for all schemes, it shows an annual income from DBCBS. Is this presumably an annuity from the rest of the lump sum then? It's not very clear.

[nickbsmooth]

I can't figure out the example illustrations.
Like for a 40yr old DBCBS= £2800pa, below that there's CDC with DBLSS = £7k pa a massive difference.
Then I don't understand are these figures based on a new employee with no existing RM pension savings as every existing employee will have a different fund value, so surely the retirement income would vary a lot.

[RobertT]

They are just illustrations based on certain variables, which may or may not be accurate. My advice is take them with a pinch of salt and try and do your own maths based on what you actually earn and your pensionable pay, etc.

[goona]

So is this choice now just for until they get the new scheme up and running and then we all get transferred into a new cdc scheme ?

Anyone ?

[jetblack]

So is this choice now just for until they get the new scheme up and running and then we all get transferred into a new cdc scheme ?

Anyone ?

Yes - unless the DC scheme is kept open upon commencement of the CDC scheme. No-one knows if it will be or not - but the best guess at this moment in time is that it will.

So no.

What I want is a one handed pensions advisor.

[yellowbelly]

They are just illustrations based on certain variables, which may or may not be accurate. My advice is take them with a pinch of salt and try and do your own maths based on what you actually earn and your pensionable pay, etc.

More like a bucket of salt, the 'illustrations' are absolute fantasy, for a start how many OPG's earn 30k plus? Just read the small 'Legal Note' at the end on p24!!!!

[nataddick]

A decision tree might have been helpful but then would it have exposed too much ?

[GRS]

It’s bloody criminal that something as important as pensions can be illustrated in such a way that 95% of staff can’t understand which scheme they should opt for. The one thing that is sure is that RM senior management will be doing their best to get their fingers on the money aided by the bent Trustees (the very people who should be looking after us). Something seriously needs to be done by government to stop the bosses of companies fingering workers pensions as it is the muddying of the waters we are seeeing by RM that leads to workers getting raped.

[nickbsmooth]

Examples that they are subtly trying to sell to us are highlighted with figures that they can't give a breakdown of. It's not in the companies interest to look after our retirement, they don't care about the staff just the profit margins.
The other thing I haven't understood is that this is all part of the package negotiated by union, I was under the impression that we are meant to be voting yes/no for pay and pension deal. So why the rush to push this through?