Defined Benefit Scheme

xylophone

 When you left RPS, were you given a statement of deferred benefits?

Does it show a GMP?

If so, what exactly does it say?

doownai

Hello again

xylophone said:

 When you left RPS, were you given a statement of deferred benefits?

Does it show a GMP?

If so, what exactly does it say?

No, I don't remember getting a statement of deferred benefits, having just spoken to RMP they say I would get between 3%-5% but forgot to ask if that was per year or when I reach 67.

Doodling you wrote

Finally, does the level pension look like something that might interest you?  If so then you need to find out the exact details from RPS.

Regarding the level pension options, Yes it does interest me, the RPS are saying the lump sums in all the options are all tax free,
So with options 1 & 2 I would get the lump sum and then the yearly pension
With options 4 & 5 I would get the lump sum, then I would get a Yearly pension to 02 May 2028 then after that it reduces to the lower amount.

I am thinking of take option 4  Lump sum £24089.44, Yearly pension to 02 May 2028 £3613.41,  then a yearly pension from 02 May 2028 £1588.95. Putting the lump sum in an easy access account and topping it up with the £3613.41 until I get my state pension and take it from there. 

I did a calculation between options 1 & 4 Yearly pension. If I choose option 1, yearly pension of £2880.96 until I am 85yrs old (25yrs)  in would get a total of £72,024 if I took option 4, yearly pension to 2028 (6yrs)I would get £21,680.46, then 19years at £1588.96 I would get £30,190.05 totalling £51,870.51.

Although option 1 of the yearly pension is £20,153.49 more than option 4 I ask myself will I see 85yrs?

Your thoughts please forum members.

Again thank you Xylophone and Doodling for your input.

xylophone

No, I don't remember getting a statement of deferred benefits, 

Were you a member of the scheme between 1978 and 1997?

If so, in which years?

gtat

doodling said:

Before the revised state pension arrangements came in, the RPS pension was designed such that when you retired, the sum of your railway pension and your basic state pension amounted to 2/3rds of your pay, assuming that you worked on the railway for 40 years.  That is why the RPS retains the concept of a basic state pension in its statements although you don't need to worry about that now (except perhaps with respect to the level pension option - see below).

Hi Doodling,

I thought State Pension was still used to calculate Final Section Pay? See extract from RPS booklet below:

How your pension is worked out 

On retirement your pension is based on 

your final average Section Pay. This is the 

greater of:

n your Final Average Pay, less 1.5 times the 

Final Average Basic State Pension; and

n one half of your Final Average Pay.

If half of your Final Average Pay is more than 

your Final Average Pay, less one and a half 

times the Final Average Basic State Pension, 

special conditions apply when we work out 

your benefits based on your Restructuring 

Premiums if applicable. 

Your final average Section Pay is divided by 

60 and multiplied by the number of years’ 

and days’ membership you have in the 

Section. For example:

n If your Final Average Pay is £30,000; and

n you have 40 years’ membership at NRA

doownai

Xylophone,

Between 1984 and 1999

Why do you ask?

doodling

Hi,

doownai said:

Hello again

xylophone said:

 When you left RPS, were you given a statement of deferred benefits?

Does it show a GMP?

If so, what exactly does it say?

No, I don't remember getting a statement of deferred benefits, having just spoken to RMP they say I would get between 3%-5% but forgot to ask if that was per year or when I reach 67.

Doodling you wrote

Finally, does the level pension look like something that might interest you?  If so then you need to find out the exact details from RPS.

Regarding the level pension options, Yes it does interest me, the RPS are saying the lump sums in all the options are all tax free,
So with options 1 & 2 I would get the lump sum and then the yearly pension
With options 4 & 5 I would get the lump sum, then I would get a Yearly pension to 02 May 2028 then after that it reduces to the lower amount.

I am thinking of take option 4  Lump sum £24089.44, Yearly pension to 02 May 2028 £3613.41,  then a yearly pension from 02 May 2028 £1588.95. Putting the lump sum in an easy access account and topping it up with the £3613.41 until I get my state pension and take it from there. 

I did a calculation between options 1 & 4 Yearly pension. If I choose option 1, yearly pension of £2880.96 until I am 85yrs old (25yrs)  in would get a total of £72,024 if I took option 4, yearly pension to 2028 (6yrs)I would get £21,680.46, then 19years at £1588.96 I would get £30,190.05 totalling £51,870.51.

You told us you were 61 so I have assumed a total of 24 years to 85.  The numbers come out as below:

Option	Initial	Initial	Later	Later	Lump	        Total	        Total	        Savings Account
	Pension	Years	Pension	Years	Sum	        Pension	        Inc Lump        After 6 Years
1	2880.96	24			19206.43	69143.04	88349.47	36492.19
2	3150.73	24			15969.24	75617.52	91586.76	34873.62
4	3613.41	6	1588.95	18	24089.44	50281.56	74371.00	45769.90
5	4290.1	6	2265.64	18	15969.24	66522.12	82491.36	41709.84

Note that the savings account figures are assuming no inflation (or a magical savings account which keeps pace with inflation) - the effect of inflation will be to bring the values closer together as the initial lump sum has less effect.

Average life expectancy at 61 is 84 for an man and 87 for a woman.

Between now and when you are 85 the best deal for maximum money is option 2 whilst the worst is option 4 (by ~£15k).

The question you have to ask yourself is whether you are willing to have less money overall by taking option 4 but have more of what you do get sooner?

xylophone

Between 1984 and 1999

Then a GMP  (pre 88 and post 88) forms part of your pension.

You might wish to check with the Administrators whether after you reach age 65, ( up to this point the Scheme should increase  the whole pension by CPI), that part of your pension representing pre 88 GMP will receive no increase, the post 88 GMP an increase only up to 3% CPI while the excess increases by CPI.

https://member.railwayspensions.co.uk/resources/news/2020/03/17/your-2020-pension-increase

doownai

Thanks Xylophone for that, I'll make a phone call later to.