Just traced an old RoyalMail SPS DB Pension

Fermion

Would appreciate some advice.

Following Martin's Money programme topic, I've just traced an old RoyalMail SPS DB. I'd forgotten that that I worked for the Post Office for close to 3 years from 1990-1993. I contacted the RoyalMail SPS Pensions helpline number who confirmed I was in the scheme and they are preparing the paperwork, although they said this may take some time. This is the pre 2012 scheme based on 1/60th and uses RPI. The scheme retirement age was 60. I believe some of the benefits can we converted to a lump sum.

I was eligible to draw the benefits in March 2009 (I'm now 76). I just wondered how DB schemes like this handle late retirees(16 years in this case) - in particular, how would they handle 16 years of deferred pension payments? Would they apply RPI increases and pay these as a single taxable payment? I presume I would still be able to take 25% of the benefits as tax free lump sum?

Has anyone else been in this situation?

Dazed_and_C0nfused

Fermion said:

Would appreciate some advice.

Following Martin's Money programme topic, I've just traced an old RoyalMail SPS DB. I'd forgotten that that I worked for the Post Office for close to 3 years from 1990-1993. I contacted the RoyalMail SPS Pensions helpline number who confirmed I was in the scheme and they are preparing the paperwork, although they said this may take some time. This is the pre 2012 scheme based on 1/60th and uses RPI. The scheme retirement age was 60. I believe some of the benefits can we converted to a lump sum.

I was eligible to draw the benefits in March 2009 (I'm now 76). I just wondered how DB schemes like this handle late retirees(16 years in this case) - in particular, how would they handle 16 years of deferred pension payments? Would they apply RPI increases and pay these as a single taxable payment? I presume I would still be able to take 25% of the benefits as tax free lump sum?

Has anyone else been in this situation?

It will be based on what the scheme rules say.

Most DB pensions don't pay a 25% tax free lump sum (TFLS) though.

They pay a (tax free) pension commencement lump sum (PCLS) based on the scheme rules.  For example it might be 3x your annual pension.

And sometimes you can opt to give up some of your pension in return for a larger (tax free) lump sum.  The amount you get can vary a lot, £12 extra lump sum for giving away £1 or pension is a common one with public sector schemes and not generally seen as a good offer unless you are desperate for the lump sum.

A lot will probably depend on whether the scheme pays arrears for that 16 year period.  If not an extra lump sum, even at 12:1 (if that is the exchange rate), might be a better option than it would usually seem.

dasherman

Fermion said:

Would appreciate some advice.

Following Martin's Money programme topic, I've just traced an old RoyalMail SPS DB. I'd forgotten that that I worked for the Post Office for close to 3 years from 1990-1993. I contacted the RoyalMail SPS Pensions helpline number who confirmed I was in the scheme and they are preparing the paperwork, although they said this may take some time. This is the pre 2012 scheme based on 1/60th and uses RPI. The scheme retirement age was 60. I believe some of the benefits can we converted to a lump sum.

I was eligible to draw the benefits in March 2009 (I'm now 76). I just wondered how DB schemes like this handle late retirees(16 years in this case) - in particular, how would they handle 16 years of deferred pension payments? Would they apply RPI increases and pay these as a single taxable payment? I presume I would still be able to take 25% of the benefits as tax free lump sum?

Has anyone else been in this situation?

I also used to be an employee of Royal Mail and started in 1987(left 2023).

At the time you would have been a member of the Post Office Pension Scheme(POPS), which later became section C of the Royal Mail Pension Plan(RMPP), and benefits accrued up to 2012 then became the responsibility of the government via the Royal Mail Statutory Pension Scheme(RMSPS) as part of the privatisation of the company.

Your benefits don't include a lump sum as standard, but you do have the option to convert some pension into one. I think the commutation rate is somewhere in the region of 1:20.

You should have had communication from the RMPP, as it was at the time in 2009, about taking your benefits at the normal retirement age of 60.

My understanding is that the scheme doesn't pay arrears, so you've basically lost 16 years worth of payments.

Dazed_and_C0nfused

dasherman said:

Fermion said:

Would appreciate some advice.

Following Martin's Money programme topic, I've just traced an old RoyalMail SPS DB. I'd forgotten that that I worked for the Post Office for close to 3 years from 1990-1993. I contacted the RoyalMail SPS Pensions helpline number who confirmed I was in the scheme and they are preparing the paperwork, although they said this may take some time. This is the pre 2012 scheme based on 1/60th and uses RPI. The scheme retirement age was 60. I believe some of the benefits can we converted to a lump sum.

I was eligible to draw the benefits in March 2009 (I'm now 76). I just wondered how DB schemes like this handle late retirees(16 years in this case) - in particular, how would they handle 16 years of deferred pension payments? Would they apply RPI increases and pay these as a single taxable payment? I presume I would still be able to take 25% of the benefits as tax free lump sum?

Has anyone else been in this situation?

I also used to be an employee of Royal Mail and started in 1987(left 2023).

At the time you would have been a member of the Post Office Pension Scheme(POPS), which later became section C of the Royal Mail Pension Plan(RMPP), and benefits accrued up to 2012 then became the responsibility of the government via the Royal Mail Statutory Pension Scheme(RMSPS) as part of the privatisation of the company.

Your benefits don't include a lump sum as standard, but you do have the option to convert some pension into one. I think the commutation rate is somewhere in the region of 1:20.

You should have had communication from the RMPP, as it was at the time in 2009, about taking your benefits at the normal retirement age of 60.

My understanding is that the scheme doesn't pay arrears, so you've basically lost 16 years worth of payments.

But presumably, and I know this isn't much consolation for the op, the amount payable now would be whatever the 2009 value was plus all the inflation revaluations in the intervening years?

dasherman

Dazed_and_C0nfused said:

dasherman said:

Fermion said:

Would appreciate some advice.

Following Martin's Money programme topic, I've just traced an old RoyalMail SPS DB. I'd forgotten that that I worked for the Post Office for close to 3 years from 1990-1993. I contacted the RoyalMail SPS Pensions helpline number who confirmed I was in the scheme and they are preparing the paperwork, although they said this may take some time. This is the pre 2012 scheme based on 1/60th and uses RPI. The scheme retirement age was 60. I believe some of the benefits can we converted to a lump sum.

I was eligible to draw the benefits in March 2009 (I'm now 76). I just wondered how DB schemes like this handle late retirees(16 years in this case) - in particular, how would they handle 16 years of deferred pension payments? Would they apply RPI increases and pay these as a single taxable payment? I presume I would still be able to take 25% of the benefits as tax free lump sum?

Has anyone else been in this situation?

I also used to be an employee of Royal Mail and started in 1987(left 2023).

At the time you would have been a member of the Post Office Pension Scheme(POPS), which later became section C of the Royal Mail Pension Plan(RMPP), and benefits accrued up to 2012 then became the responsibility of the government via the Royal Mail Statutory Pension Scheme(RMSPS) as part of the privatisation of the company.

Your benefits don't include a lump sum as standard, but you do have the option to convert some pension into one. I think the commutation rate is somewhere in the region of 1:20.

You should have had communication from the RMPP, as it was at the time in 2009, about taking your benefits at the normal retirement age of 60.

My understanding is that the scheme doesn't pay arrears, so you've basically lost 16 years worth of payments.

But presumably, and I know this isn't much consolation for the op, the amount payable now would be whatever the 2009 value was plus all the inflation revaluations in the intervening years?

Yes, it would have increased by inflation over the years.

Cobbler_tone

Dazed_and_C0nfused said:

Fermion said:

Would appreciate some advice.

Following Martin's Money programme topic, I've just traced an old RoyalMail SPS DB. I'd forgotten that that I worked for the Post Office for close to 3 years from 1990-1993. I contacted the RoyalMail SPS Pensions helpline number who confirmed I was in the scheme and they are preparing the paperwork, although they said this may take some time. This is the pre 2012 scheme based on 1/60th and uses RPI. The scheme retirement age was 60. I believe some of the benefits can we converted to a lump sum.

I was eligible to draw the benefits in March 2009 (I'm now 76). I just wondered how DB schemes like this handle late retirees(16 years in this case) - in particular, how would they handle 16 years of deferred pension payments? Would they apply RPI increases and pay these as a single taxable payment? I presume I would still be able to take 25% of the benefits as tax free lump sum?

Has anyone else been in this situation?

Most DB pensions don't pay a 25% tax free lump sum (TFLS) though.

I always feel fortunate when I read this. Mine pays anything between 0-25%. 

spaniel101

Cobbler_tone said:

Dazed_and_C0nfused said:

Fermion said:

Would appreciate some advice.

Following Martin's Money programme topic, I've just traced an old RoyalMail SPS DB. I'd forgotten that that I worked for the Post Office for close to 3 years from 1990-1993. I contacted the RoyalMail SPS Pensions helpline number who confirmed I was in the scheme and they are preparing the paperwork, although they said this may take some time. This is the pre 2012 scheme based on 1/60th and uses RPI. The scheme retirement age was 60. I believe some of the benefits can we converted to a lump sum.

I was eligible to draw the benefits in March 2009 (I'm now 76). I just wondered how DB schemes like this handle late retirees(16 years in this case) - in particular, how would they handle 16 years of deferred pension payments? Would they apply RPI increases and pay these as a single taxable payment? I presume I would still be able to take 25% of the benefits as tax free lump sum?

Has anyone else been in this situation?

Most DB pensions don't pay a 25% tax free lump sum (TFLS) though.

I always feel fortunate when I read this. Mine pays anything between 0-25%. 

I think Dazed_and_C0nfused was pointing out most DBs don't pay a TFLS....rather a PCLS.

Cobbler_tone

spaniel101 said:

Cobbler_tone said:

Dazed_and_C0nfused said:

Fermion said:

Would appreciate some advice.

Following Martin's Money programme topic, I've just traced an old RoyalMail SPS DB. I'd forgotten that that I worked for the Post Office for close to 3 years from 1990-1993. I contacted the RoyalMail SPS Pensions helpline number who confirmed I was in the scheme and they are preparing the paperwork, although they said this may take some time. This is the pre 2012 scheme based on 1/60th and uses RPI. The scheme retirement age was 60. I believe some of the benefits can we converted to a lump sum.

I was eligible to draw the benefits in March 2009 (I'm now 76). I just wondered how DB schemes like this handle late retirees(16 years in this case) - in particular, how would they handle 16 years of deferred pension payments? Would they apply RPI increases and pay these as a single taxable payment? I presume I would still be able to take 25% of the benefits as tax free lump sum?

Has anyone else been in this situation?

Most DB pensions don't pay a 25% tax free lump sum (TFLS) though.

I always feel fortunate when I read this. Mine pays anything between 0-25%. 

I think Dazed_and_C0nfused was pointing out most DBs don't pay a TFLS....rather a PCLS.

Not how I read it if alluding to 3 x wages. It is a 25% tax free amount of the value of the pension…sometimes. I think ‘most’ know the difference between a DC and DB but my DB also refers to a ‘pot’.
Semantics. It might be labelled a PCLS but it is also a TFLS.

Anyway, I’m glad the OP found their pension. Good news story.

DRS1

Cobbler_tone said:

spaniel101 said:

Cobbler_tone said:

Dazed_and_C0nfused said:

Fermion said:

Would appreciate some advice.

Following Martin's Money programme topic, I've just traced an old RoyalMail SPS DB. I'd forgotten that that I worked for the Post Office for close to 3 years from 1990-1993. I contacted the RoyalMail SPS Pensions helpline number who confirmed I was in the scheme and they are preparing the paperwork, although they said this may take some time. This is the pre 2012 scheme based on 1/60th and uses RPI. The scheme retirement age was 60. I believe some of the benefits can we converted to a lump sum.

I was eligible to draw the benefits in March 2009 (I'm now 76). I just wondered how DB schemes like this handle late retirees(16 years in this case) - in particular, how would they handle 16 years of deferred pension payments? Would they apply RPI increases and pay these as a single taxable payment? I presume I would still be able to take 25% of the benefits as tax free lump sum?

Has anyone else been in this situation?

Most DB pensions don't pay a 25% tax free lump sum (TFLS) though.

I always feel fortunate when I read this. Mine pays anything between 0-25%. 

I think Dazed_and_C0nfused was pointing out most DBs don't pay a TFLS....rather a PCLS.

Not how I read it if alluding to 3 x wages. It is a 25% tax free amount of the value of the pension…sometimes. I think ‘most’ know the difference between a DC and DB but my DB also refers to a ‘pot’.
Semantics. It might be labelled a PCLS but it is also a TFLS.

Anyway, I’m glad the OP found their pension. Good news story.

He actually says 3 x pension (not wages).

For a 1/60th scheme the PCLS used to typically be 3/80ths so a bit less than 3 x pension.

DRS1

It will be interesting to see what they say about arrears of pension.  If they don't pay arrears I wonder if there is a late retirement factor which may kick in?

dasherman

DRS1 said:

It will be interesting to see what they say about arrears of pension.  If they don't pay arrears I wonder if there is a late retirement factor which may kick in?

I know I'm not quoting the scheme rules here, but for what it's worth both the RMPP and RMSPS websites have a few 'how to videos' explaining how the two schemes work together.

The RMPP has one that explicably states 'if you don't take your benefits at 60 you'll miss out on any payments between 60 and when you take them'.

https://www.royalmailpensionplan.co.uk/section-c/your-pension/understanding-your-pension/

*The RMSPS and RMPP are essentially the same scheme, except they're administered by different organisations.