Royal Mail Pensions

oliel

My hubby has pensions with Royal Mail.   The first being the RMSPS that ended in 2008 then the Royal Mail Section C plan since then to recently followed by a collective plan tat started last year.   WE have been told he can take a lump sum from the RMSPS but not from the Section C plan - They have made these pensions super confusing and I wonder if anyone had any experience of these pensions?

Marcon

oliel said:

My hubby has pensions with Royal Mail.   The first being the RMSPS that ended in 2008 then the Royal Mail Section C plan since then to recently followed by a collective plan tat started last year.   WE have been told he can take a lump sum from the RMSPS but not from the Section C plan - They have made these pensions super confusing and I wonder if anyone had any experience of these pensions?

What reason have they given? That might make it much easier and quicker to answer your question.

oliel

Im Marcon said:

oliel said:

My hubby has pensions with Royal Mail.   The first being the RMSPS that ended in 2008 then the Royal Mail Section C plan since then to recently followed by a collective plan tat started last year.   WE have been told he can take a lump sum from the RMSPS but not from the Section C plan - They have made these pensions super confusing and I wonder if anyone had any experience of these pensions?

What reason have they given? That might make it much easier and quicker to answer your question.

Im not sure they didn't say - I can see the Section C is made up of career salary benefits and cash balance fund it says the cash benefit can only be taken fro 60 - Another phone call me thinks!  They said that for the RMSPS part you could take 25% tax free lump sum but would have to draw down the rest of the pension at the same time.

molerat

Have you read the member guide, usually a good place to start https://www.royalmailpensionplan.co.uk/wp-content/uploads/2022/07/MKG07057-546-RM-Member-Guide_ABC_v2.0.pdf

The RMSPS is a defined benefit pension, there is no cash pot and no "drawdown", so the pension must be taken as a whole with a tax free commencement lump sum and an ongoing monthly pension according to the scheme rules.

oliel

molerat said:

Have you read the member guide, usually a good place to start https://www.royalmailpensionplan.co.uk/wp-content/uploads/2022/07/MKG07057-546-RM-Member-Guide_ABC_v2.0.pdf

The RMSPS is a defined benefit pension, there is no cash pot and no "drawdown", so the pension must be taken as a whole with a tax free commencement lump sum and an ongoing monthly pension according to the scheme rules.

Ill take a look thanks do you know if the same applies to the Section C pension?

DRS1

Isn't the booklet he linked for Section C?

oliel

DRS1 said:

Isn't the booklet he linked for Section C?

TBH totally confused by this Im definitely going to have to call Royal Mail again

DRS1

You might want to look at page 12 of the booklet first.

DairyQueen

Section C (RMPP) is complimented by the cash scheme that was introduced as an interim between the ending of the career average RMPP in 2018 and the start of the collective DC scheme. The cash lump sum associated with RMPP is the cash accrued into the scheme after 2018 (DBCBS - DB Cash Balance Scheme). You can take this as cash or buy an annuity.

dasherman

You really do need to have a good read of the info!

Royal Mail pensions are stupidly complicated and it'll take a few reads to get your head around it.

The section your husband was in, is usually denoted by when he joined RM or more specifically when he joined the pension, as they were sometimes different.

If he joined sometime between 1st April 1987 and 31st March 2008, he'll be in section C. And he would have been in that section from day one and until the new collective scheme opened in October 2024.

He'll have Age60 benefits which he accrued up to 2010 and Age65 benefits from then to 2018. Plus the Defined Benefit Cash Balance Scheme(DBCBS) from 2018-2024.

It's perfectly possible to commute some pension to provide a tax free lump sum from both Age60 and Age65, although the DBCBS is designed to fund the tax free lump sum with the RMPP element of Age65 benefits.

To confuse things, all benefits up to 2008 were based on final salary, while 2008-2018 were average salary.

Plus benefits up to 2012 are administered by the RM Statutory Pension Scheme(RMSPS) and 2012-2024 is the responsibility of the RM Pension Plan(RMPP).

It is possible to transfer out the DBCBS to a personal pension for drawdown or annuity, but if the value exceeds £30k he'll need an IFA and the costs involved will almost certainly make it uneconomic.

The new collective scheme started in 2024 is known as the RM Collective Pension Plan(RMCPP) and is totally separate from the RMSPS/RMPP.

oliel

dasherman said:

You really do need to have a good read of the info!

Royal Mail pensions are stupidly complicated and it'll take a few reads to get your head around it.

The section your husband was in, is usually denoted by when he joined RM or more specifically when he joined the pension, as they were sometimes different.

If he joined sometime between 1st April 1987 and 31st March 2008, he'll be in section C. And he would have been in that section from day one and until the new collective scheme opened in October 2024.

He'll have Age60 benefits which he accrued up to 2010 and Age65 benefits from then to 2018. Plus the Defined Benefit Cash Balance Scheme(DBCBS) from 2018-2024.

It's perfectly possible to commute some pension to provide a tax free lump sum from both Age60 and Age65, although the DBCBS is designed to fund the tax free lump sum with the RMPP element of Age65 benefits.

To confuse things, all benefits up to 2008 were based on final salary, while 2008-2018 were average salary.

Plus benefits up to 2012 are administered by the RM Statutory Pension Scheme(RMSPS) and 2012-2024 is the responsibility of the RM Pension Plan(RMPP).

It is possible to transfer out the DBCBS to a personal pension for drawdown or annuity, but if the value exceeds £30k he'll need an IFA and the costs involved will almost certainly make it uneconomic.

The new collective scheme started in 2024 is known as the RM Collective Pension Plan(RMCPP) and is totally separate from the RMSPS/RMPP.

Thanks they have made it soo confusing.