Help with transferring defined benefit cash balance scheme

janeys

Having turned 60 with Royal Mail I have to take my first pension with them (I have 2 more with them) I have 2 choices:-

1, take the money and pay tax.

2, transfer the money to another provider.

I wanted to do option 2 and transfer it to my Royal London pension but they won’t do it without a financial advisor. I don’t know where best to move this money and could really use some helpful advice please.

Some details about the amount:-

• 
  The type of scheme and plan number: Royal Mail Defined Benefits Cash Balance Scheme

• The plan start date was 24/08/2006.

• The current plan value and transfer value is £23,980.01

• Are there any guaranteed annuity rates: No

• Is there any protected tax-free cash? No

• Are there any guaranteed or defined benefits? No. The plan is essentially a Cash Balance scheme

• Is there any protected pension age? No

• Are there any crystallised funds?: The fund is uncrystallised

• Is this plan subject to an earmarking or pension sharing order? No

Marcon

https://forums.moneysavingexpert.com/discussion/6659605/help-with-transferring-defined-benefit-cash-balance-scheme

It's really interesting that you are posting now - although doubtless frustrating for you - given that someone else has started a thread on the same topic. See

https://forums.moneysavingexpert.com/discussion/6659272/defined-benefit-pension-transfer-advice

From the look of it you (unlike the other poster) are in Section C, so as you say, you have 3 different components to your pension. If you are only trying to transfer the Cash Balance part, I'd go back to them and ask why you are required to receive advice - specifically, ask them exactly what 'safeguarded benefits' are involved in the Cash Balance part of your benefits (it's those which trigger the mandatory requirement for financial advice).

Your post says that it is described as 'essentially a cash balance scheme' which makes me wonder what else is involved. There must be something about the scheme which isn't immediately obvious, since a 'pure' cash balance scheme wouldn't normally require people to receive advice before they can transfer - or are you saying Royal London are insisting on the adviser before they will take the transfer?

dunstonh

This is now three cash balance threads in a short period.

I wanted to do option 2 and transfer it to my Royal London pension but they won’t do it without a financial advisor. I don’t know where best to move this money and could really use some helpful advice please.

Royal London only distributes its product via intermediaries. So, that is the reason for that.

You are free to move it but you will need to select a DIY provider. Not one that retails via intermediaries.

Marcon

Royal London only distributes its product via intermediaries. So, that is the reason for that.

…and if it's definitely a RL stipulation, rather than Royal Mail's (which your answer seems to confirm), with a transfer value of under £30K, OP shouldn't need advice if they want to transfer to a DIY provider.

OP, have a look at: https://www.moneysavingexpert.com/pensions/cheap-sipps/

janeys

Thanks Marcon, I did read that thread about sipps but didn’t want to do any handling myself. I ask for advice because I don’t have a clue and I’m having to learn but I’m just not picking it up quickly enough. I’m not even sure if another pension is the best option. I don’t know if moving it somewhere else would be better. If I take option 1 I will pay about £4,000 so that would leave about £20,000 which I could invest.

MallyGirl

https://forums.moneysavingexpert.com/discussion/comment/81922407#Comment_81922407

your investments would have to do some heavy lifting to cover the loss to tax. If you don't want to handle a SIPP yourself why would you consider taking on investing outside of a pension wrapper where you also have to deal with capital gains? If you do a bit of reading on here there are plenty of simple multi asset funds you could use in a set and forget way in a SIPP, or the bigger providers offer off the shelf portfolios

dasherman

I think you need to clarify exactly what you have!

You say the start date was 24/8/06?

But the RM Cash Balance scheme didn't start until April 2018!

So you presumably joined RM in 2006 and therefore are in section C, and have Age60 benefits from then up to 2010, Age65 benefits from 2010-2018 then the Cash Balance from 2018-2024.

What you accrued up to 2012 comes under the RMSPS, while 2012-2024 is the RMPP.

The Cash Balance is specifically 'attached' to RMPP benefits, which for most posties will be their Age65 pension accrued 2012-2018, but in certain circumstances some may be payable with Age60 too.

Or, is it possible you joined the cash balance sometime after April 2018, in which case you would be in section F?

If so you would have paid into the RM Defined Contribution Plan for at least 5 years prior.

Either way, the normal retirement age for the Cash Balance is 65 and a reduction is applied if accessed beforehand.