ROYAL MAIL PENSION QUOTE AT 55 DONT UNDERSTAND

oliel

oliel said:

Hi i had my pension quote from royal mail im in section C - my understanding is that theses are the figures if i decide to take my pension at 55

My RMPP pension shows the following
Option 1
regular income £1503 pa
tax free cash none
tax free cash from cash balance none
leftover benefits from cash balance none
Option 1A
regular income £1503 pa
tax fee cash none
tax free cash from cash balance £10229
leftover benefits from your cash balance £16581
Option 2
regular income £1211 
tax free cash £8077
Tax free cash from your cash balance none
leftover benefits from your cash balance none

This reads to me that Option 1A is best option trying to work out why anyone would choose option 1 or 2 - feel im missing something here?

any help much appreciated - super confused.

So i've been told today by Royal mail pension advice people that most people go for option 1A I can take £10,229 tax free with £1503 pa regular income then the £16581 is taxable that I can take whenever I like but will be taxed on 75% of it.   I am very curious as to why anyone would take option 1 or 2 as essentiallyl that looks like less money - am i missing something here?  These are my age 65 benefits btw I was told if I take my ages 60 benefits from RMPS I would also have to take them from RMPP and the same goes for age 65 benefits I was also told that I can take the age 60 benefits only and take the age 65 benefits at a later stage.

DRS1

oliel said:

oliel said:

Hi i had my pension quote from royal mail im in section C - my understanding is that theses are the figures if i decide to take my pension at 55

My RMPP pension shows the following
Option 1
regular income £1503 pa
tax free cash none
tax free cash from cash balance none
leftover benefits from cash balance none
Option 1A
regular income £1503 pa
tax fee cash none
tax free cash from cash balance £10229
leftover benefits from your cash balance £16581
Option 2
regular income £1211 
tax free cash £8077
Tax free cash from your cash balance none
leftover benefits from your cash balance none

This reads to me that Option 1A is best option trying to work out why anyone would choose option 1 or 2 - feel im missing something here?

any help much appreciated - super confused.

So i've been told today by Royal mail pension advice people that most people go for option 1A I can take £10,229 tax free with £1503 pa regular income then the £16581 is taxable that I can take whenever I like but will be taxed on 75% of it.   I am very curious as to why anyone would take option 1 or 2 as essentiallyl that looks like less money - am i missing something here?  These are my age 65 benefits btw I was told if I take my ages 60 benefits from RMPS I would also have to take them from RMPP and the same goes for age 65 benefits I was also told that I can take the age 60 benefits only and take the age 65 benefits at a later stage.

Yes.  Check out @Dasherman's post in response to my question.

Option 1A may still be the best route but for Options 1 and 2 you still have the Cash Balance to deal with.

On the age 60 and age 65 benefits you want to check what happens if you take age 65 benefits from age 60 - in all likelihood the age 65 benefits are reduced by an early retirement factor.

oliel

Vitor said:

I expect 1A is the option most people would go for. Option 1 would attract people who want the cash balance to grow, option 2 if you want max cash now and perhaps have a life shortening illness. 

Thanks still confuse though how is option 2 max cash now if it's £1200 pa plus £8k tax free lump sum when option 1 a is £1503 pa and £10k tax free lump sum?  I feel im missing something fundamental?

oliel

DRS1 said:

oliel said:

oliel said:

Hi i had my pension quote from royal mail im in section C - my understanding is that theses are the figures if i decide to take my pension at 55

My RMPP pension shows the following
Option 1
regular income £1503 pa
tax free cash none
tax free cash from cash balance none
leftover benefits from cash balance none
Option 1A
regular income £1503 pa
tax fee cash none
tax free cash from cash balance £10229
leftover benefits from your cash balance £16581
Option 2
regular income £1211 
tax free cash £8077
Tax free cash from your cash balance none
leftover benefits from your cash balance none

This reads to me that Option 1A is best option trying to work out why anyone would choose option 1 or 2 - feel im missing something here?

any help much appreciated - super confused.

So i've been told today by Royal mail pension advice people that most people go for option 1A I can take £10,229 tax free with £1503 pa regular income then the £16581 is taxable that I can take whenever I like but will be taxed on 75% of it.   I am very curious as to why anyone would take option 1 or 2 as essentiallyl that looks like less money - am i missing something here?  These are my age 65 benefits btw I was told if I take my ages 60 benefits from RMPS I would also have to take them from RMPP and the same goes for age 65 benefits I was also told that I can take the age 60 benefits only and take the age 65 benefits at a later stage.

Yes.  Check out @Dasherman's post in response to my question.

Option 1A may still be the best route but for Options 1 and 2 you still have the Cash Balance to deal with.

On the age 60 and age 65 benefits you want to check what happens if you take age 65 benefits from age 60 - in all likelihood the age 65 benefits are reduced by an early retirement factor.

ok so are you saying that with option 1 and 2 they dont include my total cash balance of £26k - and that I could take the cash balance at a later date?  - finding this really confusing.

DRS1

oliel said:

DRS1 said:

oliel said:

oliel said:

Hi i had my pension quote from royal mail im in section C - my understanding is that theses are the figures if i decide to take my pension at 55

My RMPP pension shows the following
Option 1
regular income £1503 pa
tax free cash none
tax free cash from cash balance none
leftover benefits from cash balance none
Option 1A
regular income £1503 pa
tax fee cash none
tax free cash from cash balance £10229
leftover benefits from your cash balance £16581
Option 2
regular income £1211 
tax free cash £8077
Tax free cash from your cash balance none
leftover benefits from your cash balance none

This reads to me that Option 1A is best option trying to work out why anyone would choose option 1 or 2 - feel im missing something here?

any help much appreciated - super confused.

So i've been told today by Royal mail pension advice people that most people go for option 1A I can take £10,229 tax free with £1503 pa regular income then the £16581 is taxable that I can take whenever I like but will be taxed on 75% of it.   I am very curious as to why anyone would take option 1 or 2 as essentiallyl that looks like less money - am i missing something here?  These are my age 65 benefits btw I was told if I take my ages 60 benefits from RMPS I would also have to take them from RMPP and the same goes for age 65 benefits I was also told that I can take the age 60 benefits only and take the age 65 benefits at a later stage.

Yes.  Check out @Dasherman's post in response to my question.

Option 1A may still be the best route but for Options 1 and 2 you still have the Cash Balance to deal with.

On the age 60 and age 65 benefits you want to check what happens if you take age 65 benefits from age 60 - in all likelihood the age 65 benefits are reduced by an early retirement factor.

ok so are you saying that with option 1 and 2 they dont include my total cash balance of £26k - and that I could take the cash balance at a later date?  - finding this really confusing.

It looks like they have left it out for some reason (I don't know why) and it looks like you can take it separately (although I don't know when and as @marlot pointed out it may be more tax efficient to take option 1A).  Although I have to admit the commutation factor looks quite good under Option 2 - people in say the LGPS would definitely do Option 1A but then their commutation rate is pretty poor. 

xylophone

Then option 1 gives you the maximum DB pension with no commutation and leaves you the full cash balance amount to deal with separately.

You might,  for example, transfer the CB to a Sipp, take the max tax free lump sum (£6702)  and leave the rest invested, hopefully to grow in value.

Or you might take the balance as a taxable lump sum.



Option 1A  essentially combines DB with CB allowing you  the maximum DB pension, maximum tax free lump sum  and the rest of the CB to take as taxable income/taxable lump sum.

Option 2 allows you to commute £292 of the DB pension for a tax free lump sum of £8077  (commutation rate 1: 27) and the full cash balance amount to deal with separately, see above.

oliel

xylophone said:

Then option 1 gives you the maximum DB pension with no commutation and leaves you the full cash balance amount to deal with separately.

You might,  for example, transfer the CB to a Sipp, take the max tax free lump sum (£6702)  and leave the rest invested, hopefully to grow in value.

Or you might take the balance as a taxable lump sum.



Option 1A  essentially combines DB with CB allowing you  the maximum DB pension, maximum tax free lump sum  and the rest of the CB to take as taxable income/taxable lump sum.

Option 2 allows you to commute £292 of the DB pension for a tax free lump sum of £8077  (commutation rate 1: 27) and the full cash balance amount to deal with separately, see above.

Thanks so much for explaining - im currently thinking i will take my age 60 benefits from the rmsps and rmpp and leave the 65 benefits sitting for the time being.

Chlobo02

@oliel did you manage to take just your age 60 on its own?

Xenon

A quick question for you experts

The Cash Balance portion - if it is over £30,000 (which i believe most in RM are at this point) and you want to transfer it to SIPP etc does that not need financial advice signed off beforehand ?

Just curious

dasherman

https://forums.moneysavingexpert.com/discussion/comment/81925382#Comment_81925382

There'sno reason why they wouldn't have been able to.