No freedom for my pension!!!

grantie2u · 11 July 2017 at 4:15PM

I'm approaching 55 and I'm considering taking my ex Royal Mail pension at 55. I've read a lot about people getting a cash equivalent value and transferring it to my private pension so that i can draw however much I wish from it, get a larger tax free 25% in the first instance and in the event of my death I can will all of it to my spouse or children instead of just 50% of it or worse still nothing when my wife also dies.
Royal mail tell me that whist I can request the cash equivalent value, I can not transfer it to a private scheme which would offer me pension freedom as it is now a part of the unfunded public sector schemes meaning I can not take advantage of the pensions freedoms.
I have never received any communication either from Government or Royal Mail about this and feel cheated of the opportunity to take advantage of the pensions freedoms the rest of the country has, why is this the case and why is it ok that no one told us this?

xylophone · 11 July 2017 at 4:30PM

http://www.royalmailpensionplan.co.uk/section-c/leaving-scheme/transferring-out

Your pension has different parts, including:
• The RMSPS benefits you built up before 1 April 2012 and the RMPP benefits you built up after this date.
• Age60 benefits, which are usually paid when you reach 60, and Age65 benefits, which are usually paid when you reach 65.
• Additional Voluntary Contributions (AVCs), if you choose to pay them.

You can transfer different parts separately. However, under Government rules you can’t transfer your RMSPS benefits to a Defined Contribution arrangement (that includes the Royal Mail Defined Contribution Plan). Contact the Pensions Service Centre for more information. Remember: you should always get financial advice to ensure you make the choice that’s right for you.

https://www.pensions-ombudsman.org.uk/determinations/2017/po-11197/royal-mail-statutory-pension-scheme/

.......the Scheme, which is an unfunded public sector scheme. In 2015, new legislation (Appendix 1) came into effect which meant benefits from unfunded public sector schemes could not be transferred to defined contribution schemes after 5 April 2015 (the transfer cut-off date).

grantie2u · 11 July 2017 at 4:44PM

Yes thanks, I'm aware of all of the above. My question was why is this the case so why was the legislation allowed and how is that fair to me under the pensions freedoms act?

AnotherJoe · 11 July 2017 at 4:57PM

grantie2u wrote: »

I have never received any communication either from Government or Royal Mail about this and feel cheated of the opportunity to take advantage of the pensions freedoms the rest of the country has, why is this the case and why is it ok that no one told us this?

Would it have made any difference? And you have received communication. Just not proactively (unless it was in a scheme update you didn't read) probably because you are on such a good deal it wouldn't be worth doing.

"the rest of the country" doesn't have this anyway. You have a gold plated pension compared, to "the rest of the country" if by that you mean non public sector. So thats why.

Seems to me you want your cake and eat it.

atush · 11 July 2017 at 4:58PM

Because the Act was NEVER meant for you and your DB pension. It was meant for DC pensions. Which have a pot of money and people were forced to do certain things with it.

and given there is no pot of money for you, and all the others in non funded public service pensions incl Teachers and nurses, you cant transfer it. Period?

xylophone · 11 July 2017 at 5:20PM

http://www.bbc.co.uk/news/business-17423461

The nationalisation of the Royal Mail's pension scheme has been approved by the European Commission.

For all pension earned to date, the scheme will become an unfunded arrangement, paid for out of taxation, like the schemes for teachers, civil servants, NHS staff and the armed forces.

http://citywire.co.uk/money/why-theres-no-pension-freedom-for-the-public-sector/a801075

And this is the problem. While the Local Government Pension Scheme – the largest in public sector – does have a pot of contribution money to fall back on, many other pension schemes for teachers, NHS employees, civil servants, armed forces, police and fire-fighters are unfunded, or 'pay as you go', schemes paid out of general taxation.

Unfunded schemes are a large financial burden on the state. According to the Office of National Statistics, current liabilities to workers' future pensions stand at £852 billion, or a staggering 58% of the UK economy.

While this huge sum may not be a problem if retirees are paid their pension over a long period of time, as they were designed to, it becomes a very big problem if lots of people decide to transfer out and ask for a cash payment.

Thrugelmir · 11 July 2017 at 6:15PM

grantie2u wrote: »

I'm approaching 55 and I'm considering taking my ex Royal Mail pension at 55. I've read a lot about people getting a cash equivalent value and transferring it to my private pension so that i can draw however much I wish from it, get a larger tax free 25% in the first instance and in the event of my death I can will all of it to my spouse or children instead of just 50% of it or worse still nothing when my wife also dies.

Doesn't guarantee a better return than the benefits offered under your pension though. Even it were accessible.

hyubh · 11 July 2017 at 6:24PM

xylophone wrote: »

While this huge sum may not be a problem if retirees are paid their pension over a long period of time, as they were designed to, it becomes a very big problem if lots of people decide to transfer out and ask for a cash payment.

In the Royal Mail case, only because everyone's favourite odd-jobing freesheet editor flogged off the scheme's assets 'to bring down the national debt'...

Thrugelmir · 11 July 2017 at 6:30PM

hyubh wrote: »

In the Royal Mail case, only because everyone's favourite odd-jobing freesheet editor flogged off the scheme's assets 'to bring down the national debt'...

What assets?

hyubh · 11 July 2017 at 7:29PM

Thrugelmir wrote: »

What assets?

The assets of the Royal Mail Pension Fund before Osborne nationalised the scheme and sold them off... It was a trust-based scheme before then, so a step less public sector-y than the LGPS (which is a statutory not trust-based scheme even though it is funded).

Silvertabby · 11 July 2017 at 9:30PM

I have never received any communication either from Government or Royal Mail about this and feel cheated of the opportunity to take advantage of the pensions freedoms the rest of the country has, why is this the case and why is it ok that no one told us this? Posted by grantie2u

When the 'Pension Freedoms' were announced, the newspaper reports did say that they only applied to personal/money purchase pension plans, and not to the (unfunded) Public Sector defined benefit schemes.

No freedom for my pension!!!

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