Railway Pension

JoeCrystal

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! That is very interesting! Can you actually double-check that with your employer and pension administrators just to be double sure? If one can get access to the Final Salary Pension scheme via SWR, that is certainly one of the next employers I will certainly look out for considering I live in that region! Especially if they still allow transfers in and so on! Actually, I will certainly keep an eye out for careers in that area in the future!  Got to accrue very cheap sweet sweet pension income somehow rather than my current pathetic misery auto-enrollment DC! 

Preacher64

MX5huggy said:

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

It’s not particularly straightforward to make a comparison but elements outlined in the 65 scheme booklet show things like the member’s contribution, what the cap on your pensionable pay is, the actuarial reduction if you want to retire early, how your retirement benefits increase, conversion of BRASS to pension, lump sum entitlement etc.

If you list these side by side with your existing CARE scheme, you should get a feel for how much you will be contributing, what the annual benefit increment will be, restrictions on pensionable pay etc.
If you consider at what age you will be aiming to retire, you can see what the actuarial reductions will be  and perhaps access the website planner to get some idea of the final benefits at your intended retirement age, although this will be impacted by unknowns such as promotions etc.

Generally speaking, RPS65 will result in you paying more in but getting more out but this is not necessarily the only consideration.

MX5huggy

But I can’t see what the benefits are. Is it 1/80th of the best of the last 3 years service etc for each years service? The CARE is shown 1/60th accrued each year.

Preacher64

MX5huggy said:

But I can’t see what the benefits are. Is it 1/80th of the best of the last 3 years service etc for each years service? The CARE is shown 1/60th accrued each year.

Page 23 breaks it down. It’s your final average scheme pay divided by 60 and multiplied by your length of service (years and days).

ewaste

The OP is a Network Rail Employee, on day 1 they were set to be enrolled into NRDC which is unsurprisingly the default scheme. However thankfully, unlike a large number of people, they decided to join NR CARE which is a standard 60th's accrual CARE scheme. Network Rail currently require employees to complete 5 years’ service before there is a one off opportunity to join the Network Rail Section of the Industry Wide Railways Pension scheme (RPS).

The different sections have slightly different T's and C's negotiated with the relevant unions and sponsoring companies, e.g. some sections do or don't allow transfers in or may offer a different Normal Retirement Age. To further complicate matters there are multiple sets of T’s and C’s within each section e.g. dependent upon when you joined the scheme, whether you previously opted to pay higher contributions, which sections you have membership in and then transferred rights to a new section.

The Railways Pension scheme is somewhat of a 'Hybrid' between Career Average and true 'Final Salary' this is primarily down to two key caveats: -
1. The Basic State Pension (BSP) Deduction, pensionable pay is a member’s headline salary for the role minus 75% of the BSP. Therefore, a member with a basic salary of £30,000 for the purposes of calculating DB accrual have a pensionable pay of £30,000-£5,532.15 = £24,467.85.
2. Pensionable Restructuring Premiums (P(RP)), if a member receives a pay increase above that years RPI then a PRP is created and is pensionable for future service only. This is also the case for an increase in pay due to a promotion i.e. change of Grade or Band. 

The DB pension eventually payable at the end of the day is based on Final Average Pay minus BSP Deduction plus Final Average Restructuring premium. Therefore, arguably you need to accrue enough pay increases and/or promotions to offset the BSP Deduction.

The OP has asked which is a better choice between the NR CARE Scheme which is 60th's accrual and revalued by CPI vs the Network Rail Section of the RPS which retains a link to 'Final Salary' and RPI. The honest answer is that it depends upon multiple factors i.e. your age. career and promotional aspirations or prospects. This is where it becomes a bit of a ‘Crystal Ball’ job.

Preacher64

you only get PRP if you make higher contributions though, so if you consider it unlikely that you will receive regular increases above RPI then it may well be beneficial to contribute the extra money to BRASS and at least guarantee some benefit from your payments.

gtat

ewaste said:

The OP is a Network Rail Employee, on day 1 they were set to be enrolled into NRDC which is unsurprisingly the default scheme. However thankfully, unlike a large number of people, they decided to join NR CARE which is a standard 60th's accrual CARE scheme. Network Rail currently require employees to complete 5 years’ service before there is a one off opportunity to join the Network Rail Section of the Industry Wide Railways Pension scheme (RPS).

The different sections have slightly different T's and C's negotiated with the relevant unions and sponsoring companies, e.g. some sections do or don't allow transfers in or may offer a different Normal Retirement Age. To further complicate matters there are multiple sets of T’s and C’s within each section e.g. dependent upon when you joined the scheme, whether you previously opted to pay higher contributions, which sections you have membership in and then transferred rights to a new section.

The Railways Pension scheme is somewhat of a 'Hybrid' between Career Average and true 'Final Salary' this is primarily down to two key caveats: -
1. The Basic State Pension (BSP) Deduction, pensionable pay is a member’s headline salary for the role minus 75% of the BSP. Therefore, a member with a basic salary of £30,000 for the purposes of calculating DB accrual have a pensionable pay of £30,000-£5,532.15 = £24,467.85.
2. Pensionable Restructuring Premiums (P(RP)), if a member receives a pay increase above that years RPI then a PRP is created and is pensionable for future service only. This is also the case for an increase in pay due to a promotion i.e. change of Grade or Band. 

The DB pension eventually payable at the end of the day is based on Final Average Pay minus BSP Deduction plus Final Average Restructuring premium. Therefore, arguably you need to accrue enough pay increases and/or promotions to offset the BSP Deduction.

The OP has asked which is a better choice between the NR CARE Scheme which is 60th's accrual and revalued by CPI vs the Network Rail Section of the RPS which retains a link to 'Final Salary' and RPI. The honest answer is that it depends upon multiple factors i.e. your age. career and promotional aspirations or prospects. This is where it becomes a bit of a ‘Crystal Ball’ job.

Very interesting.  Thanks!

As posted earlier in the thread, I am in the SWR section of the RPS. This is a bit different as the BSP deduction uses 1.5 Basic State Pension, which seems quite punitive to me!

I still don't really understand how salary increases are reflected in the Final Salary calculation, either.

Preacher64

gtat said:

I still don't really understand how salary increases are reflected in the Final Salary calculation, either.

Each salary increase results in an increase of your overall average salary, (the sum of each year’s salary divided by the number of years), which is used to calculate your scheme benefits.

ConfusedofYorkshire

ewaste said:

The OP is a Network Rail Employee, on day 1 they were set to be enrolled into NRDC which is unsurprisingly the default scheme. However thankfully, unlike a large number of people, they decided to join NR CARE which is a standard 60th's accrual CARE scheme. Network Rail currently require employees to complete 5 years’ service before there is a one off opportunity to join the Network Rail Section of the Industry Wide Railways Pension scheme (RPS).

The different sections have slightly different T's and C's negotiated with the relevant unions and sponsoring companies, e.g. some sections do or don't allow transfers in or may offer a different Normal Retirement Age. To further complicate matters there are multiple sets of T’s and C’s within each section e.g. dependent upon when you joined the scheme, whether you previously opted to pay higher contributions, which sections you have membership in and then transferred rights to a new section.

The Railways Pension scheme is somewhat of a 'Hybrid' between Career Average and true 'Final Salary' this is primarily down to two key caveats: -
1. The Basic State Pension (BSP) Deduction, pensionable pay is a member’s headline salary for the role minus 75% of the BSP. Therefore, a member with a basic salary of £30,000 for the purposes of calculating DB accrual have a pensionable pay of £30,000-£5,532.15 = £24,467.85.
2. Pensionable Restructuring Premiums (P(RP)), if a member receives a pay increase above that years RPI then a PRP is created and is pensionable for future service only. This is also the case for an increase in pay due to a promotion i.e. change of Grade or Band. 

The DB pension eventually payable at the end of the day is based on Final Average Pay minus BSP Deduction plus Final Average Restructuring premium. Therefore, arguably you need to accrue enough pay increases and/or promotions to offset the BSP Deduction.

The OP has asked which is a better choice between the NR CARE Scheme which is 60th's accrual and revalued by CPI vs the Network Rail Section of the RPS which retains a link to 'Final Salary' and RPI. The honest answer is that it depends upon multiple factors i.e. your age. career and promotional aspirations or prospects. This is where it becomes a bit of a ‘Crystal Ball’ job.

Thank you for your reply 

Sadly I'm still non the wiser. I tried the Unbiased website as recommended by the latter received, but so far they haven't matched me. At one point they did provide a match with an IPA, but when I spoke to him he said he couldn't give advise on these schemes. So I'm back to square one.

It is a bit of a crystal ball needed situation. I'm in my late 30s so really haven't planned my retirement at all. I'm in the signalling grade and don't have any desire to move into an office job.
 But my career path could involve moves up and down the grades. I can imagine wanting to move to a quieter box in the last few years before retirement (and I wasn't sure if that means that avoiding RPS is best, although I understand it's not really a final salary scheme).

Is there anyone on here who has spoken to an IPA who can advise?