Railway Pension

ConfusedofYorkshire

I work on the railway and am currently contributing to the CARE pension scheme.

I am coming up to my 5 year anniversary with the company and so have been offered the one off opportunity to join the RPS65 scheme.

Please can someone point me in the right direction for finding a IFA who can offer me advise specific to these schemes so that I can make a decision about what to do? 

Or if anyone on here has an insight into which is the better scheme today (people on the railway often see the Railway Pension Scheme as a gold plated final salary scheme, but my understanding is that this is no longer the case for new joiners).

Thank you.  

Marcon

ConfusedofYorkshire said:

I work on the railway and am currently contributing to the CARE pension scheme.

I am coming up to my 5 year anniversary with the company and so have been offered the one off opportunity to join the RPS65 scheme.

Please can someone point me in the right direction for finding a IFA who can offer me advise specific to these schemes so that I can make a decision about what to do? 

Or if anyone on here has an insight into which is the better scheme today (people on the railway often see the Railway Pension Scheme as a gold plated final salary scheme, but my understanding is that this is no longer the case for new joiners).

Thank you.  

Any competent IFA will be able to advise. The 'better' scheme will depend on a range of factors specific to you and your situation, so there's no one neat answer as you might reasonably hope!

Preacher64

I would suggest you download the RPS65 scheme handbook and compare the contribution rates, normal retirement age, actuarial reductions, index linking etc. with your existing CARE scheme and see which one suits your personal objectives best. 

There is no black and white answer but it is generally felt within the Rail industry that RPS65, while inferior to the RPS60 scheme, does provide greater benefits and flexibility than the CARE scheme for the majority of, but not necessarily all, members.

If you consider your age, desired retirement age, impact of the different contribution rates, whether or not you contribute to BRASS, actuarial reduction and annual increment rates / capping, then you will probably have a fair idea yourself which of the two schemes suits you best.

gtat

I thought RPS was still Final Salary rather than CARE, or is that not the case for all sections?

Preacher64

gtat said:

I thought RPS was still Final Salary rather than CARE, or is that not the case for all sections?

The RPS65 and CARE are both DB schemes but not Final Salary.

gtat

Preacher64 said:

gtat said:

I thought RPS was still Final Salary rather than CARE, or is that not the case for all sections?

The RPS65 and CARE are both DB schemes but not Final Salary.

OK, thanks. What about the RPS scheme which has an NRA of 62? I joined a couple of months ago and think it is Final Salary?

JoeCrystal

gtat said:

Preacher64 said:

gtat said:

I thought RPS was still Final Salary rather than CARE, or is that not the case for all sections?

The RPS65 and CARE are both DB schemes but not Final Salary.

OK, thanks. What about the RPS scheme which has an NRA of 62? I joined a couple of months ago and think it is Final Salary?

You "think"? What do your scheme rulebooks for the new joiners say then? They must send some literature surely? You are a member of the scheme after all

Preacher64

gtat said:

Preacher64 said:

OK, thanks. What about the RPS scheme which has an NRA of 62? I joined a couple of months ago and think it is Final Salary?

I’ve never heard of anything like that. RPS60 was Final Salary up until around 2012, when it was changed to the benefit increase being based on each year’s pensionable pay. When RPS65 was introduced, it was a career average DB scheme, greatly inferior to RPS60. The other two schemes currently in use are the CARE DB scheme and the NRDC scheme which is a Defined Contribution scheme. NRDC has a stated NRA of 65 but like any DC scheme can be taken at any age allowed by the prevailing legislation.

Are you perhaps a member of the NRDC and self-selected a desired retirement age of 62?

gtat

Preacher64 said:

gtat said:

Preacher64 said:

OK, thanks. What about the RPS scheme which has an NRA of 62? I joined a couple of months ago and think it is Final Salary?

I’ve never heard of anything like that. RPS60 was Final Salary up until around 2012, when it was changed to the benefit increase being based on each year’s pensionable pay. When RPS65 was introduced, it was a career average DB scheme, greatly inferior to RPS60. The other two schemes currently in use are the CARE DB scheme and the NRDC scheme which is a Defined Contribution scheme. NRDC has a stated NRA of 65 but like any DC scheme can be taken at any age allowed by the prevailing legislation.

Are you perhaps a member of the NRDC and self-selected a desired retirement age of 62?

Ok, thanks. It's definitely a DB scheme- the scheme guide is here. https://member.railwayspensions.co.uk/docs/default-source/Member-Guides/2035.pdf

Which I read as Final Salary with an NRA 62?

MX5huggy

I’ve had a scan read of RPS65 hand book it really is not clear what the benefits are. https://www.mynrpension.co.uk/wp-content/uploads/2020/11/RPS65-booklet-November-2020.pdf

The CARE is much clearer https://www.mynrpension.co.uk/wp-content/uploads/2021/03/CARE-Members-Guide-04.2021.pdf

Preacher64

gtat said:

Ok, thanks. It's definitely a DB scheme- the scheme guide is here. https://member.railwayspensions.co.uk/docs/default-source/Member-Guides/2035.pdf

Which I read as Final Salary with an NRA 62?

Thanks for the link. That is a specific scheme for South Western Railways and does have a new section with an NRA of 62. It is also still based on your final section pay / length of service so is quite a rare and valuable scheme to be a member of.

The RPS schemes are generic and apply to Network Rail staff and a number of other companies but SW seem to have a hybrid which retains some of the beneficial historic elements of the British Rail scheme.