Benefit options

Whilst the benefits you will receive are clearly set out by the rules of a defined benefit (DB) scheme, you will still have a number of options in how to claim them.

You can see a summary of these options in a video here and you can read about them in more detail below.  A range of tools, including a pension planner, are also available within your myRPS account to help you consider your options.

At retirement you can choose to:

1. Take part lump sum/part pension

You can take some of your benefits as a cash lump sum and the rest as regular pension payments.

It’s up to you decide how much of each you take, for example

Graphic showing that you can either take a larger lump sum and less pension OR a smaller lump sum and more pension

Generally, as long as the lump sum is worth 25% of your entire benefits, or less, then it will be tax free. 

There may also be rules about the exact amount that can be taken as a lump sum or cash depending on the rules of the specific section of the Scheme you’re a member of.

 You can find out more in you Member Guide, which is available in the ‘library’ once you’ve logged into your myRPS account.

2. All pension

You may be able to take all of your benefits as regular pension payments, and none as a lump sum.

This is done by converting any lump sum entitlement into additional pension.

It may be restricted if you have paid any Additional Voluntary Contributions (AVCs) to BRASS and by the rules of the particular section of the Scheme you’re paying into.

You can find out more in you Member Guide, which is available in the ‘library’ once you’ve logged into your myRPS account.

3. Take your entire benefits as a cash lump sum

This is only possible in very limited circumstances, such as:

  • Under small pot/trivial commutation
  • Commutation on the grounds of serious ill health or
  • Short service leaver refunds

And where the rules of your specific section allows.

4. Transfer your entire benefits to an alternative pension provider

This is only possible where the rules of your specific section allows.

Please see the page on transfers for more information

 

Other options to consider

Before taking your benefits in any of the ways outlined above, you may want to consider one of the following options:

  • Extra pension for your dependants

As a member of the Scheme, a pension will already be paid to your eligible dependants when you die.  They may also receive a cash lump sum.

You could however decide to give up part of your own pension entitlement to provide an extra pension for a spouse or named dependant.

In doing so:

  • you give up part of your pension – exactly how much will depend on your age and sex, as well as those of your dependant
  • your named dependant will get an extra 15% of your pension when you die

However, the money will be lost if your dependant dies before you do. It will not go back into your pension pot. And you cannot change your named dependant once this option has been taken.

  • Level pension

You may want to take your RPS benefits before you can claim your State Pension.

With the level pension option you take more RPS pension before your State Pension age and less RPS pension after your State Pension age.

This aims to smooth or level out your income throughout your retirement as shown below

Diagram showing how pension levelling works, with levelling giving you a higher Scheme pension before  State Pension age and a higher one afterwards.

If you’re unsure of your State Pension age you can find out here.

  • Transfer to a DC pension  

Following the introduction of pension freedoms by the Government in 2015, there are now a wide range of ways to take your pension if you’re in a defined contribution (DC) scheme.

It is possible to transfer your DB pension to a DC pension. However this does come with a number of considerations

Both the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) believe that it will be in most people’s best interests to keep their defined benefit pension. 

If you are considering transferring your pension then you may benefit from financial advice. You might also have to do this by law if the value of your DB benefits is more than £30,000 and you are looking to transfer to a Defined Contribution/Personal Pension Arrangement.

Liverpool Victoria (LV) has been chosen as the official partner to give RPS members access to financial advice. LV can be contacted on 0800 023 4187. You are still free to choose your own Independent Financial Adviser (IFA). 

You can find out more about transferring your pension here.

 

The impact of Additional Voluntary Contributions (AVCs)

There are two main ways of making Additional Voluntary Contributions (AVCs) within the Scheme – BRASS and AVC Extra.

If you’ve paid into either of these then it may affect your pension as outlined below.

You can check the value of your AVCs by logging in to your myRPS account.  And find out more about these rules in your Member Guide.

  • BRASS

The main AVC arrangement open to RPS members is BRASS.

Payments made into BRASS sit separately from your main pension benefits, until you retire.

When you take your RPS benefits, a value equal to your BRASS pot must be taken as a cash lump sum, up to the maximum tax free lump sum permitted by HMRC. Any leftover will be converted into pension. 

As part of the pensions freedoms introduced by the Government in 2015, you can choose to transfer your BRASS funds to another arrangement instead.  This is only possible if you have already stopped paying into BRASS.

You would not need to transfer your main Scheme benefits at the same time as your BRASS benefits, although you would be able to do so if you are a preserved member.

If you are considering transferring BRASS or your main Scheme benefits, we strongly recommend you seek independent financial advice.

Liverpool Victoria (LV) has been chosen as the official partner to give RPS members access to financial advice. LV can be contacted on 0800 023 4187. You are still free to choose your own Independent Financial Adviser. 

You can find out more about BRASS in retirement in our Read as You Need guide here.

  • AVC Extra 

AVC Extra is open to members who are already paying the maximum BRASS contributions.

If you’re under 55 years old, then your benefits from AVC Extra must be taken at the same time as your other benefits in the Scheme. They will, however, come to you in a separate pension payment. And this is only possible if you have a Protected Pension Age of below 55.

If you’re over 55 years old, then you can choose to leave your benefits from AVC Extra invested, even after you start taking your other Scheme benefits.  You must however, take your AVC benefits before your 75th birthday.

You can find out more about AVC Extra in retirement in our Read as You Need guide  here.

Making the right decision for you

If you’re unsure which type of retirement will be best for you, you may want to speak to an Independent Financial Adviser (IFA).

Liverpool Victoria (LV) has been chosen as the official partner to give RPS members access to financial advice. LV can be contacted on 0800 023 4187.  

You are still free to choose your own Independent Financial Adviser (IFA). You can find an IFA in your area at unbiased.co.uk. For the best outcome, you should make sure it’s someone authorised by the Financial Conduct Authority (FCA) and who specialises in retirement planning. 

A range of planning tools are also available within your myRPS account to help you consider your options. For DB members this includes:

  • a pension planner - showing what your pension might be worth when you retire and the different ways you can choose to use that money.
  • a retirement budgeting calculator – showing how much money you might need for your retirement. 

Login or register here to find out more.

You can also see a short video explaining your options below