We are expecting a high volume of requests during this period so appreciate your patience as we aim to help as many of your colleagues as possible.
Some key points for the current TOC VSS include:
We appreciate this may be a life-changing event for you and your benefit information may play an important part in any decision you take. We will be working extremely hard to meet your requests but please do bear with us – we are liaising closely with your employer to achieve the timescales set out for this exercise and will ensure any impact on our service is relayed to help manage expectations.
If you’re leaving employment due to severance or redundancy, or are considering being part of a voluntary severance scheme (VSS) or a voluntary redundancy exercise, then you may have questions about your financial future.
You will need to speak to your employer directly for specific information about your severance or redundancy package and the options available to you. This includes:
You may find the general information below useful when considering the impact of severance on your pension. And you may also wish to get financial advice – please see the ‘what’s right for me’ section below for more details.
Severance or redundancy will not affect the amount of benefits you have built up in your pension to date, but it will affect your ability to build up future benefits.
Any funds and/or benefits that you have built up in your pension to date, will remain safe, even if you leave work due to severance/redundancy or as part of a voluntary severance scheme (VSS) or redundancy exercise.
You can find out roughly what your pension is currently worth by requesting an estimate in your myRPS account here.
Estimates can be redone online for free, as many times and covering as many possible scenarios as you need. Please be aware that these are not a guarantee of benefits and the results will be affected if your circumstances change, for example if you take your benefits directly after leaving active service, the retirement terms may be more generous than if your benefits are preserved and you take them at a later date.
You can find further instructions for how to request an estimate online in a short video here. If you haven’t already done so, you will need to register for your free myRPS account, before you can request an estimate. This should only take a few minutes to do and you can find out how here.
Your estimate will be based on a number of components, including your pensionable salary. This is your annual salary that is taken into account when calculating your pension contributions. It typically does not include bonuses or overtime. Please check with your employer if you are not sure which part of your pay counts towards your pension benefits. There’s also a Read As You Need Guide for information here
Unfortunately, there may be some instances where you won’t be able to get an accurate estimate online. For example this may be where a more complex calculation is required, or if you’re close to reaching your Lifetime Allowance (LTA) tax limit (see tax section below).
If this is the case, then you should receive a message on the website telling you that your estimate cannot be completed. We will then carry out some further manual work and send you an estimate by post instead.
Due to demand we can only carry out one manual estimate request per member. As an alternative you may be able to use the Pension Planner to get a forecast of your estimated benefits. You’ll find the Pension Planner in the ‘Planning for the future’ section when you log into your myRPS account.
If you’re considering boosting your pension with an augmentation payment where permitted (see boosting your pension section below) then this won’t be reflected in any estimates you receive from the Scheme administrator and you’ll need to contact your employer directly for an estimate on those. However, you can request an estimate with a BRASS top-up included in your calculation.
If you need help understanding your estimate, take a look at our estimates glossary.
If you’re leaving work due to severance or redundancy, then all future payments into your pension will stop. This includes contributions made by your employer, as well as those made by you.
You’ll also have a few decisions to make about what happens next. For example:
More information about these options can be found in the relevant sections below.
Yes. In most cases you will be able to use part of your severance or redundancy package to give your pension a boost. Depending on what is being offered by your employer, this can be done in 1 of 2 ways:
You can ask for part of your severance package to be paid into your pension as a one-off Additional Voluntary Contribution (AVC).
This will be tax free, as long as it’s within your Annual Allowance (see tax implications below).
And, when it’s time to retire, the money you’ve paid in through AVCs can be taken in a different way to your main Scheme pension. This includes taking it as a lump sum, subject to tax, or transferring it to another scheme.
The main AVC arrangement, open to RPS members, is called BRASS.
As a DB member you can make as many one-off contributions to BRASS as you like, but for many sections there is a maximum amount you can contribute in each tax year. That is either:
Your employer, usually the payroll department, should also be able to give you an accurate calculation of how much you might be able to pay into BRASS. If you’re a DB member, you can also use the BRASS calculator to get an idea of how much you can pay into BRASS. The BRASS calculator is available in the Planning for the future section when you log into your myRPS account.
You may wish to take financial advice if you are considering making a one-off contribution to BRASS. Similarly, if you have the option to make an augmentation payment instead of a one-off contribution to BRASS, then you may also wish to take financial advice as to which is the best option for you.
If you’ve already exceeded your BRASS maximum allowance, you may be to contribute into another arrangement called AVC Extra (this does not apply to members of the Network Rail Section). This is only possible if the pension contributions and BRASS contributions you’ve already made in the current tax year, are less than either your gross pay or the Annual Allowance tax limit, whichever is lower. If you would like to join the AVC Extra arrangement, you should speak to your employer.
If you’re a DB member, you can find out how a BRASS top-up could benefit your retirement savings by using the Pension Planner in your myRPS account. Simply enter the amount you are considering paying in and click ‘re-calculate.’ The planner will then show you what impact this could have on your benefits. Or you can request an estimate which includes a BRASS top-up in your calculation.
If the Pension Planner doesn’t show the full impact of making a one-off contribution, it could be because you’ve exceeded your Lifetime Tax Allowance, known as LTA. You can read more about this in the tax section below.
For IWDC members, you can pay as much as you like into your pension as an Additional Voluntary Contribution. However, there are limits on the amount you will get tax relief on. These limits are known as the Annual Allowance and the Lifetime Allowance – please see the tax implications section below for more details.
If you’re a DC member. You can see the impact making an Additional Voluntary Contribution might have on your pension pot by using the Retirement Modeller in your myRPS account.
If you do decide to make a one off contribution from your severance package, this can usually be done directly through your employer. Your employer will typically make this payment as part of their final contributions into your pension, so it may be deposited after we’ve already finalised your benefits. If that’s the case, don’t worry, we’ll automatically recalculate your benefits and send you the updated information.
You can find out more about making a one off payment in the video here.
If permitted by your employer, you may be able to have some of the money you’re entitled to receive as part of your severance or redundancy package paid directly by your employer into your pension, effectively increasing your pension pot. This is known as pension augmentation.
Pension augmentation is offered entirely at the discretion of the employer, so you will need to speak to them directly to find out if this is an option available to you.
If it is offered, then an advantage of pension augmentation is that you may pay less tax on the taxable elements of your severance/redundancy package, such as holiday pay or bonuses (if they’re offered). Everyone’s tax affairs do differ though, so please seek independent financial advice if you’re unsure about how this could work for you.
Broadly speaking, you may also be able to decide how you would like the augmentation payment to be used. For example you can use it to buy more scheme pension - giving you a higher regular income when you retire - as well as an additional lump sum.
Where applicable, please speak to your employer if you are considering augmenting your pension and would like an estimate of how it could impact your pension benefits and to confirm this option is available to you.
You can also find out more about pension augmentation, including the tax implications and the process involved, in the Read As You Need Guide here.
Whether it’s possible or tax efficient to use part of your severance or redundancy package to boost your pension, will typically depend on three things.
Your AA is usually the lower of:
However, your AA may be lower if you have a high taxable income.
If you’re concerned that you may be approaching your own tax limits, then please speak to your employer or get independent financial advice.
Once your severance is finalised all payments into your pension will stop. You then have three main options for what to do with the pot you’ve already built up. These are:
The benefits you have now will be kept safe until you’re ready to claim them. If you’re a defined benefit member, then your benefits will also increase every April. This increase is typically in line with the Consumer Prices Index (CPI). If you are a defined contribution member, or if you have BRASS or AVC Extra funds, these will increase (or potentially decrease) in line with the investment returns achieved on your funds.
If you are currently entitled to Schedule 8 early retirement factors on any of your benefit entitlement on retirement from active service, then these factors would no longer be available as a preserved member.
Take early retirement (if applicable)
If you’re aged over 55 during the severance process (or over 50 with a Protected Pension Age), then you may decide to take early retirement. Your pension payments are likely to be lower than they would be if you waited until your Normal Retirement Age (typically between 60 and 65). This is because, if you are a defined benefit member, an early retirement factor is applied to reflect the fact that benefits are being paid earlier and are also expected to be paid for longer.
If you’re eligible, then the early retirement factors under this option might be more generous than they would be if you chose to follow option 1 and become a preserved member, before subsequently taking early retirement at a later date.
Transfer your pension to another providerOnce all payments into your pension have stopped, you can decide to transfer your pension out of the RPS and to another provider. Transferring your pension does, however, carry significant risks and you should carefully compare the benefits of your current pension with any alternatives before making a decision. You can read more about transferring your pension here.
If you have previous periods of membership you will need to ask for separate estimates for each record you hold. You can switch between your membership records in your myRPS account, using the blue ‘Switch scheme’ drop down menu at the top of your screen once you’ve logged in.
If you are under 55, there are more rules around taking and/or transferring your benefits. Please refer to the ‘Planning for Retirement’ section on the member website.
And, if you’re a DB member with a protected pension age, please refer to the ‘Protected Pension Age’ Read as you Need guide.
Understanding how severance or redundancy can affect your pension, and knowing what actions to take can be quite daunting.
To help you make the right decisions for you, try speaking to a financial adviser. Liverpool Victoria (LV) has been chosen to give RPS members access to financial advice and can be contacted on 0800 023 4187. You can also find an Independent Financial Adviser (IFA) in your area at unbiased.co.uk.
Alternatively, moneyhelper.org.uk, brings together the support and services of three government-backed financial guidance providers: Money Advice Service, The Pensions Advisory Service and Pension Wise. It offers free support on a wide range of financial matters, online and over the phone, including:
A range of tools, designed to help you understand your pension and how it can work for you, are also available on your member website. These include:
And you can request estimates for your pension for free, online, as many times as you need.
If you have questions about your severance, redundancy or voluntary severance scheme (VSS), including the impact on your pension, you should contact your employer in the first instance.
You can also find additional information in our FAQs here.
If you’re already involved in a severance or redundancy exercise, then you should have been contacted by your employer with details of what you need to do next.
If necessary, your employer will then refer you to the scheme administrator, Railpen, using the dedicated contact information below.
For Network Rail employees it’s currently NRQueries@railpen.com
For TOC employees it’s currently TOCqueries@railpen.com
These email addresses are only for employees who are currently involved in a severance or redundancy exercise for those specific companies. And, when levels of demand are high, replies may take a little longer than usual.
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