Can't cash in my Royal Mail Pension???

Mark300zx

Just spoke the pension team at the Royal Mail as I have a very small pension with them that I wish to cash in, the advisor said that option is not available, I thought all pensions were subject to that option?

xylophone

Which section of the scheme are you in?
https://www.royalmailpensionplan.co.uk/

AlanP_2

Not all are.
 
If it is a Defined Benefit pension many of the "public sector" schemes are essentially unfunded and the taxpayer picks up the bill each year. You cannot transfer out of these as that would trigger a higher in-year charge to the taxpayer so no transfers out allowed.

Why do you want to cash it in? What is the pension worth? For around 9 out of 10 people sticking with their guaranteed DB pension is the best thing top do. 

Silvertabby

Are you thinking of trivial commutation?

To do that:

1.  Your pension scheme must offer that option (not all do).

2.  The notional value of your Royal Mail pension and (.... and this is the cruncher...) all other pensions other than the State pension must be less than £30K.

To find the notional value of your RM pension multiply the annual pension X 20.  £30K sounds a lot, but a little pension of just £1,500 per year busts it.

Mark300zx

Thanks for all the replies, tbh I am torn between cashing it in or keeping it, I was surprised I could draw it at 55 which would be circa 1500 lump and 380 a year, so in pension terms, a small amount, but will see what happens when the forecast comes through!!!

dunstonh

 I thought all pensions were subject to that option?

No they dont.

dasherman

Did you leave RM some time before 31st March 2012 by any chance?
If so, you'll be a member of the RM Statutory Pension Scheme and that can only be transferred to another DB scheme. It can't be transferred to a DC scheme, or 'cashed in'.
See their website: https://www.royalmailsps.co.uk/im-not-receiving-my-pension-yet/i-want-to-transfer-my-benefits

xylophone

Just spoke the pension team at the Royal Mail as I have a very small pension with them that I wish to cash in, the advisor said that option is not available, I thought all pensions were subject to that option?

Thanks for all the replies, tbh I am torn between cashing it in or keeping it, I was surprised I could draw it at 55 which would be circa 1500 lump and 380 a year, so in pension terms, a small amount, but will see what happens when the forecast comes through!!!

You were told you couldn't "cash it in"?

https://www.royalmailsps.co.uk/im-not-receiving-my-pension-yet/i-want-to-transfer-my-benefits

You cannot transfer benefits earned before 1 April 2012 to a money purchase scheme – a scheme where your pension is invested in your own fund and not based on your salary or service in the scheme.
That said  
although for main rules see Silvertabby's post above
see also
https://www.pensionsadvisoryservice.org.uk/content/publications-files/uploads/Taking_small_pensions_Detailed_SPOT008_V1.5.pdf

2a. Special rule for Occupational Schemes only

If you have small benefits in an occupational pension, it may be possible for you to cash them in under triviality rules, even if the main rules above have not been met.

The following are the main qualifying criteria (provided the scheme was set up before 1 July 2008. There may be some other conditions if it was set up later):

•   You must be at least aged 60 or 55 if benefits are taken after 6 April 2015;

•   You must not be a controlling director of the sponsoring employer;

•   The payment must not exceed £10,000 (before 27 March 2014, the limit was £2,000);

•   The payment extinguishes your right to benefits under the scheme; and

•   There must not have been a transfer-out of the scheme in the 3 years preceding the date of

•   payment; and

•   The first 25% of the payment is tax-free (unless the pension is in payment, when the whole

•   amount is liable to income tax), with the remaining 75% taxable under PAYE; and

•   The rules of the scheme allow for such a payment.

  
  

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  2 TRIVIAL COMMUTATION DETAILED SPOT008 V1.5 APRIL 2015