56 year old subject to penalties for accessing pensions

Wiltsmum

The advice was not to take the Royal Mail offer but transfer it out to a private pension to get a larger pot. Also to achieve a better spousal pension if anything happened to my husband (he is unwell). The pot offered then was only 10% more with no draw down possible.

Wiltsmum

This is where we have got to. The lump sum and increased income mean my husband can stop the stupid overtime which he really shouldn't do.

Wiltsmum

It is there but of the 77 guys that work for my husband only 2 knew about it!

Mr.Generous

Wiltsmum wrote: »

The advice was not to take the Royal Mail offer but transfer it out to a private pension to get a larger pot. Also to achieve a better spousal pension if anything happened to my husband (he is unwell). The pot offered then was only 10% more with no draw down possible.

If he is unwell now take it early, you are looking at a 20 year break even situation if you wait. Not many of us are certain we will live beyond 75 years, we hope so, but people over 50 die every day, over 60 its entirely normal.

Wiltsmum

IFA told us the penalties wouldn't apply if we put it into a open market pension. Royal Mail say they do. So we can transfer but there is no real benefit other than better spousal provision. The Royal Mail pays a reduced pension to surviving spouses.

Wiltsmum

Thank you. Your replies make sense. We do know that life expectancy stats RM work on and I think he needs to take it. As you say he will break even if he lives to 75. I have a private pension so I think that is where the mass confusion has come in.

Wiltsmum

Nope, not common knowledge here.

NoMore

Use the quote button so its clear who your replying to, and also maybe read the entire thread before responding, instead of responding to each message as you read them.


It just makes the entire thread easier to follow for everyone.

Silvertabby

Wiltsmum wrote: »

My husband (55 and 11 months young) has completed 31 years service with Royal Mail. We have been trying to access his pension for the last 11 months. He was shocked to find the figures reduced by 5% for each year under 65, effectively halving the figures. Next we were told to transfer it to an open market pension to save being subject to these penalties but apparently they still apply. We are getting nowhere fast and have a house purchase in process. Does anyone know more about these old schemes?

Actuarial reductions for early payment (ie, before scheme normal retirement age) are the norm throughout the whole of the pensions industry, and not something that RM has dreamed up.

Also, whoever told you that the reductions wouldn't apply if you were to transfer to a private scheme is wrong. Annuities are based on age as well as other factors, so £XX could 'buy' you a £10K a year pension at 65 but only £5K at 55, simply because the pension will be paid for an additional 10 years and so has to be spread more thinly.

I'm not an expert in the RM pension schemes - but it does look like that these benefits, in line with most unfunded public sector schemes, can't be transferred to DC (private pension plan). Could someone in the know confirm that for the OP?

Please don't tell me that your future finances/house purchase were based on the assumption that your husband would get age 65 worth of pension 9 years earlier without any reductions?

xylophone

I'm not an expert in the RM pension schemes - but it does look like that these benefits, in line with most unfunded public sector schemes, can't be transferred to DC (private pension plan). Could someone in the know confirm that for the OP?

https://www.royalmailpensionplan.co.uk/section-c/leaving-scheme/transferring-out