Pension advice
Discussion
Have asked around at work and majority aren't aware/interested/unable to give any advice.
Just thought i'd try posting here to see if one of the finance bods could give me some simplified thoughts.
Appreciate each situation is different and I'm leaning towards paying the extra because pensions = good. Right?
Just to note my current pay (£35k ish), is due an annual raise of RPI +0.5% for the foreseeable.
Age 35 and hoping to finish at 65.
Further to the recent consultation, as part of the changes made to contracts of employment and the RPS following the last valuation of the RPS and the end of contracting-out, it was agreed that existing members of the RPS, as at 31 March 2016,could elect for any non-promotional salary increases on or after 1 April 2016 above the annual pensionable salary cap (Retail Prices Index (RPI)) to be pensionable for future service only from the date of the increase by exercise of a one-off option, subject to the member paying extra contributions “RPS Extra Contributions 2016”.
The option is now available for members to exercise until 30 June 2016, after which time no option forms will be
accepted.
Members who choose “RPS Extra Contributions 2016” will:
Have a new tier of Pensionable Restructuring Premium (PRP) for each increase in non-promotional pay
(above the annual pensionable salary cap) which will be pensionable only for future service from the date
of the increase; and
pay higher contributions than members who do not,
This will apply from 01 April 2016.
For practical purposes employer cannot deduct the higher contributions until July 2016, however employer
will calculate member contribution arrears from April to June and start deducting them from the July/August
2016 pay runs (arrears will be deducted gradually at half your normal rate of contributions over subsequent pay
periods).
For further information about Pensionable Restructuring Premium (PRP), please refer to the RPS leaflet “A guide
for members if your pay has been restructured” which is available from the RPS page of emloyer
Members who choose the “RPS Extra Contributions 2016” option will see an increase to their normal contributions. This represents 0.04% to reflect the higher future service joint contribution rate (subject to change at future valuations) and an additional fixed contribution of 1.74%. A member with pensionable pay of £35,000 would currently pay as follows:
Member type Members who do not choose “RPS Extra Contributions 2016”
7.00% £41.02 per week
Members who do choose “RPS Extra Contributions 2016”
8.78% £51.45 per week
Next steps?
If you wish to elect to pay the higher “RPS Extra Contributions 2016”, please read the notes on the following page, sign the declaration and return your completed form to the address shown. It must be received by RPMI no later than 5pm 30 June 2016
Page 2 of 2
Employer Shared Cost Section of the Railways Pension Scheme (RPS)
RPS Extra Contributions 2016 – Election Form
Please read the notes below and if you wish to take up this one-off permanent option complete the declaration at the
bottom of the form and post or email to the contact details shown.
I confirm that:
1. I have read pages one and two of this RPS Extra Contributions 2016 – Election form.
2. I understand this is a one-off option and I cannot revoke or cancel my election for “RPS Extra Contributions
2016” under any circumstances.
3. I understand that the initial additional contribution is 1.78% but this may vary from time to time at future RPS
Valuations, and I agree that these contributions will be deducted from my pay.
4. I accept that the “RPS Extra Contribution 2016” is in addition to the regular normal contributions I am required to
pay to the RPS, which may vary from time to time at future RPS Valuations.
5. I accept that if my actual non-promotional future salary increases do not exceed RPI in any year or in a particular
year, I will not have a Pensionable Restructuring Premium, but I will still pay the “RPS Extra Contributions 2016” in
addition to the regular normal contributions payable by RPS members who have not made an “RPS Extra
Contribution 2016” election until my membership of the RPS ceases.
6. I understand that my completed option form must be received by RPMI no later than 5pm on 30 June 2016 and
late, incomplete or unreceived forms will not be accepted.
7. This will form a legally binding change to my terms and conditions of employment.
8. I have taken or seriously considered taking independent financial advice before completing this option form.
Just thought i'd try posting here to see if one of the finance bods could give me some simplified thoughts.
Appreciate each situation is different and I'm leaning towards paying the extra because pensions = good. Right?
Just to note my current pay (£35k ish), is due an annual raise of RPI +0.5% for the foreseeable.
Age 35 and hoping to finish at 65.
Further to the recent consultation, as part of the changes made to contracts of employment and the RPS following the last valuation of the RPS and the end of contracting-out, it was agreed that existing members of the RPS, as at 31 March 2016,could elect for any non-promotional salary increases on or after 1 April 2016 above the annual pensionable salary cap (Retail Prices Index (RPI)) to be pensionable for future service only from the date of the increase by exercise of a one-off option, subject to the member paying extra contributions “RPS Extra Contributions 2016”.
The option is now available for members to exercise until 30 June 2016, after which time no option forms will be
accepted.
Members who choose “RPS Extra Contributions 2016” will:
Have a new tier of Pensionable Restructuring Premium (PRP) for each increase in non-promotional pay
(above the annual pensionable salary cap) which will be pensionable only for future service from the date
of the increase; and
pay higher contributions than members who do not,
This will apply from 01 April 2016.
For practical purposes employer cannot deduct the higher contributions until July 2016, however employer
will calculate member contribution arrears from April to June and start deducting them from the July/August
2016 pay runs (arrears will be deducted gradually at half your normal rate of contributions over subsequent pay
periods).
For further information about Pensionable Restructuring Premium (PRP), please refer to the RPS leaflet “A guide
for members if your pay has been restructured” which is available from the RPS page of emloyer
Members who choose the “RPS Extra Contributions 2016” option will see an increase to their normal contributions. This represents 0.04% to reflect the higher future service joint contribution rate (subject to change at future valuations) and an additional fixed contribution of 1.74%. A member with pensionable pay of £35,000 would currently pay as follows:
Member type Members who do not choose “RPS Extra Contributions 2016”
7.00% £41.02 per week
Members who do choose “RPS Extra Contributions 2016”
8.78% £51.45 per week
Next steps?
If you wish to elect to pay the higher “RPS Extra Contributions 2016”, please read the notes on the following page, sign the declaration and return your completed form to the address shown. It must be received by RPMI no later than 5pm 30 June 2016
Page 2 of 2
Employer Shared Cost Section of the Railways Pension Scheme (RPS)
RPS Extra Contributions 2016 – Election Form
Please read the notes below and if you wish to take up this one-off permanent option complete the declaration at the
bottom of the form and post or email to the contact details shown.
I confirm that:
1. I have read pages one and two of this RPS Extra Contributions 2016 – Election form.
2. I understand this is a one-off option and I cannot revoke or cancel my election for “RPS Extra Contributions
2016” under any circumstances.
3. I understand that the initial additional contribution is 1.78% but this may vary from time to time at future RPS
Valuations, and I agree that these contributions will be deducted from my pay.
4. I accept that the “RPS Extra Contribution 2016” is in addition to the regular normal contributions I am required to
pay to the RPS, which may vary from time to time at future RPS Valuations.
5. I accept that if my actual non-promotional future salary increases do not exceed RPI in any year or in a particular
year, I will not have a Pensionable Restructuring Premium, but I will still pay the “RPS Extra Contributions 2016” in
addition to the regular normal contributions payable by RPS members who have not made an “RPS Extra
Contribution 2016” election until my membership of the RPS ceases.
6. I understand that my completed option form must be received by RPMI no later than 5pm on 30 June 2016 and
late, incomplete or unreceived forms will not be accepted.
7. This will form a legally binding change to my terms and conditions of employment.
8. I have taken or seriously considered taking independent financial advice before completing this option form.
Edited by Rick101 on Tuesday 12th April 09:05
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