Royal Mail Pension - advice please

wen2202

Hubby has been a part-time postman for the last 3 years, he has been asked whether he wants to join the pension scheme.

He'll pay 6% they'll pay 12%.

He is 48 so realisticly he has another 11/12 years until the RM finish age of 60 although he can stay on until he is 65 and continue to pay into the pension until 65. So you could say 15/16 years of paying in.

Anyone got any ideas of what sort of amount this would give him at retirement. Is it worth him doing or will that little bit extra just get taken back by the tax man.

Your thought or advice please.

Thankyou,

Wendy

Mortgage_&_debt_free

They're offering him a 12% pay rise (or 6% if you subtract his contribution), why wouldn't he take it?

Either way, he'll be investing 18% of his salary + tax relief into his pension.

EdInvestor

Anyone got any ideas of what sort of amount this would give him at retirement. Is it worth him doing or will that little bit extra just get taken back by the tax man.

Ask the RM pension department about the amount.It epends on whether it's a final salary or money purchase scheme.

You normally get a 25% tax free cash sum from a pension in retirement,which you can invest for extra income. Other pension income is taxed in the same way as ordinary income.You get an extra age allowance of around 2k a year after 65 on top of the normal personal allowance, but this is normally used up by the state pensions.

Does hubby know how much he'll get from them?

Get a forecast here:
https://www.thepensionservice.gov.uk

lowbrim

This is a no brainer snatch there hand off!

He will get tax relief on his 6% so he will only be paying around 5% as a basic rate taxpayer. I believe that the Royal Mail pension scheme is a final salary (could be wrong so needs checking) and I would guess that with 15years service he will get around one third of his final salary (not todays salary but what it is in 15years time and if he gets a promotion it will be based on that salary!!) so if he is on £10k when he retires he will get £3k/yr indexed + a lump sum at least equal to that. To get that pension today you would need at least £50,000 in your pension pot.

A someone has already said the Post Office will have leaflets that will go all through this. The other consideration is that it is backed up by the government so there is no risk of you losing it.

wen2202

Thankyou all, we thought yes but we were just a bit unsure of what to do, he has got a frozen 2 part pearl pension pot of about £9500 and a really old bit of an occupational via scottish life (good grief what a nightmare).

He'll join up and then they'll sort out the pearl etc and that should at least buy his 3 (royal mail) years of back contributions and add a bit more into his final retirement pot.

Thanks again.

wendy