Understanding your DB contributions

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Our blogs will give you information, tips, insights and guidance to help you get to know your pension and support you on your journey to retirement.

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18/6/2025

Author: Editorial

<span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; word-spacing: normal; caret-color: auto; white-space: inherit">In general, as a defined benefit (DB) member, the amount you pay in (contribute) depends on:<ul><li>The category of member you are </li><li>Your Pensionable Pay – this is your Pay at 1 April every year. This may be capped in some sections.</li><li>Your Section Pay – this is your Pensionable Pay minus 1.5 times the Basic State Pension. This may also be capped in some sections. </li><li>The contribution percentage rates for your Section, as set out in the Scheme rules. For some sections, Section Pay must be at least 50% or 55% of Pensionable Pay. </li></ul>Please remember that rules vary between Sections and you should check your Member Guide for further details of what determines your contribution rate. Contribution rates can also change for a number of reasons, for example as a result of the Actuarial Valuation, which is carried out every 3 years. You can find more details on why contributions change below.   What sets a workplace pension apart from a personal pension and other savings options is that your employer normally contributes as well. How much your employer pays into the RPS depends on the same factors as your contribution amount outlined above.<span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; word-spacing: normal; caret-color: auto; white-space: inherit"> For example: <img src="https://cdn3.railpen.com/mp-sitefinity-prod/images/default-source/infographics-(current)/db-contributions-table.png?sfvrsn=da463ccc_1" alt="An example of DB contribution rates and what they are based on">You can find out what percentage you pay into the Scheme in your Member Guide. This is available in the 'My Library' area when you log into <a href="/login">your myRPS account</a>. You may also be able see your pension contributions on your payslip. <h4>How your contributions are paid: </h4>Your pension contributions are taken from your gross pay, so they are not subject to Income Tax. This means you are getting tax relief on your contributions (up to certain limits) so that some of the money that would normally have gone to the government in tax, effectively goes towards your pension instead Many employers also operate a salary sacrifice scheme for pension contributions, also known as SMART. It means that: <ul type="disc"><li>your employer pays your pension contributions on your behalf</li><li>your contractual pay is adjusted to reflect this change </li><li>you and your employer pay National Insurance on a lower salary </li></ul>If you’re unsure whether you pay your pension contributions via salary sacrifice please check with your employer. You can also find more information in your Member Guide. <h4>When your contributions change </h4>The % rate of contributions can go up or down, to meet the cost of paying current and future benefits from the Section. Generally, the rate is reviewed every 3 years and agreed between the Trustee, the employer and an external adviser known as the Scheme Actuary. The contributions you pay are then fixed from July each year, using your Pensionable Pay at 1 April They may change at other times, for example as a result of: <ul type="disc"><li>a change in personal circumstances, such as taking statutory maternity, paternity or adoption leave</li><li>a change in working hours e.g. moving to part-time hours </li></ul>You can read more about this on the <a href="/defined-benefit-members/im-still-working/changes-to-circumstances">change in circumstances page</a> and in your Member Guide. <h4>Ways of saving more </h4>You can choose to pay in more to ‘top-up’ your main pension savings if you wish. This is known as making Additional Voluntary Contributions (AVCs). These are held separately from your main Scheme benefits and are invested in a fund, or range of funds, with the aim of growing your AVC pot over time. Like your main Scheme contributions outlined above, AVCs are usually taken from your pay before tax, so you benefit from tax relief there too. The main AVC arrangement in the RPS is called BRASS, which you can incorporate with your main Scheme benefits when you take them.  If you reach the limit you can pay into BRASS, you may be able to apply for another arrangement, called AVC Extra.  You can find out more about both options in the <a href="/defined-benefit-members/saving-more-BRASS-AVC-Extra">saving more area</a> of the website. You can put as much money as you want into your pension but there are certain limits which can affect the amount of tax relief you're allowed. If you exceed these limits, you may have to pay a tax charge. Visit the<a href="/pension-essentials/pension-tax-limits"> </a><a href="https://member.railwayspensions.co.uk/pension-essentials/pension-tax-limits" data-sf-ec-immutable="">pension tax limits page</a> to find out more.

Blog

Understanding your DB contributions

Do you know how much you contribute to your pension, or how it’s paid into the RPS?

In general, as a defined benefit (DB) member, the amount you pay in (contribute) depends on:

The category of member you are
Your Pensionable Pay – this is your Pay at 1 April every year. This may be capped in some sections.
Your Section Pay – this is your Pensionable Pay minus 1.5 times the Basic State Pension. This may also be capped in some sections.
The contribution percentage rates for your Section, as set out in the Scheme rules. For some sections, Section Pay must be at least 50% or 55% of Pensionable Pay.

Please remember that rules vary between Sections and you should check your Member Guide for further details of what determines your contribution rate.

Contribution rates can also change for a number of reasons, for example as a result of the Actuarial Valuation, which is carried out every 3 years. You can find more details on why contributions change below.

What sets a workplace pension apart from a personal pension and other savings options is that your employer normally contributes as well. How much your employer pays into the RPS depends on the same factors as your contribution amount outlined above.

For example:

An example of DB contribution rates and what they are based on

You can find out what percentage you pay into the Scheme in your Member Guide. This is available in the 'My Library' area when you log into your myRPS account.

You may also be able see your pension contributions on your payslip.

How your contributions are paid:

Your pension contributions are taken from your gross pay, so they are not subject to Income Tax. This means you are getting tax relief on your contributions (up to certain limits) so that some of the money that would normally have gone to the government in tax, effectively goes towards your pension instead

Many employers also operate a salary sacrifice scheme for pension contributions, also known as SMART. It means that:

your employer pays your pension contributions on your behalf
your contractual pay is adjusted to reflect this change
you and your employer pay National Insurance on a lower salary

If you’re unsure whether you pay your pension contributions via salary sacrifice please check with your employer.

You can also find more information in your Member Guide.

When your contributions change

The % rate of contributions can go up or down, to meet the cost of paying current and future benefits from the Section.

Generally, the rate is reviewed every 3 years and agreed between the Trustee, the employer and an external adviser known as the Scheme Actuary.

The contributions you pay are then fixed from July each year, using your Pensionable Pay at 1 April

They may change at other times, for example as a result of:

a change in personal circumstances, such as taking statutory maternity, paternity or adoption leave
a change in working hours e.g. moving to part-time hours

You can read more about this on the change in circumstances page and in your Member Guide.

Ways of saving more

You can choose to pay in more to ‘top-up’ your main pension savings if you wish. This is known as making Additional Voluntary Contributions (AVCs).

These are held separately from your main Scheme benefits and are invested in a fund, or range of funds, with the aim of growing your AVC pot over time.

Like your main Scheme contributions outlined above, AVCs are usually taken from your pay before tax, so you benefit from tax relief there too.

The main AVC arrangement in the RPS is called BRASS, which you can incorporate with your main Scheme benefits when you take them. If you reach the limit you can pay into BRASS, you may be able to apply for another arrangement, called AVC Extra.

You can find out more about both options in the saving more area of the website.

You can put as much money as you want into your pension but there are certain limits which can affect the amount of tax relief you're allowed. If you exceed these limits, you may have to pay a tax charge. Visit the pension tax limits page to find out more.

6/8/2021

Author: Editorial

<span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; caret-color: auto"> <span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; caret-color: auto">Nobody likes to imagine getting older, so many of us choose to ignore our pensions.  It’s nothing new, but it’s unwise. A recent study* has found two-thirds of adults retiring in 2021 in the UK won’t have enough in their pension to fund their post-work life. Many people are now facing a difficult retirement. <span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; caret-color: auto"> <h2>Women especially should consider their position </h2>Society and family structures have changed hugely since the UK pension system was first created in the early 1900s. The traditional nuclear family was the norm, with men typically earning the money and women raising the children at home. But now, this family model has changed. There are more women than ever in the workplace, there are many single-parent families and different family structures.According to a report published by Barnett Waddingham in March 2021**, women who take time off work have fewer pension savings than women who don’t.For a woman taking two 12 month career breaks in her early 30s, with no pension savings or salary increase during this time, it can lead to a level of pension savings at retirement of around 10% lower compared to a woman with no career breaks.<h2>Lack of pension parity for women </h2>It’s not just career breaks that impact women’s pension savings. The report found that the pension gap between men and women is most stark in the high affluence group – typically because men’s pay in this group is significantly higher than women’s.There are many more contributing factors, including:<ul><li>Taking on caring responsibilities for children, ageing parents or other family members typically gives less flexibility for many women to progress in their careers, earn more and contribute more to workplace pensions;</li><li>The imbalance of women working in lower paid or lower skilled occupations;</li><li>Women are more likely to be on zero-hour contracts or working multiple part-time roles so do not reach workplace pension auto-enrolment thresholds;</li><li>The increasing rates of divorce, particularly in later life;</li><li>The low level of default contribution rates in general.</li></ul><h2>Will you have enough for the retirement you want? </h2>Women in particular should carefully consider their options well before retirement, and whether they have enough saved to maintain their current lifestyle. Our planning tools can help.  When you log in, or register for an account, you will see two modellers in the ‘Planning for the future’ section of your ‘myRPS account’.<ul><li>Defined benefit members can use the pension planner</li><li>IWDC members can use the retirement modeller.</li></ul>All members can then use the retirement budgeting calculator to find out if your current level of pension benefits and/or savings will be enough, or whether you might want to make adjustments.You can use the calculator together with your latest benefit statement, or request an estimate. It’s free to do, you can request as many as you like, and the estimate is usually ready within an hour. These planners will show you what your annual income is likely to be when you retire. As a rough guideline, current research shows you will need between £10,200 (basic) to £33,000 (comfortable) per year when you finish work.The Retirement Living Standards are benchmarks for the income you might need in order to afford different lifestyles - minimum, moderate and comfortable. Full details can be found at <a href="http://www.retirementlivingstandards.org.uk/" data-sf-ec-immutable="">retirementlivingstandards.org.uk</a>. But as a general rule, they suggest the following:<img src="00ddcd22-bb33-4a45-9ba4-28b0d6aff300" style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; caret-color: auto" alt="retirement Living Standards are benchmarks for how much you might need in retirement based on a minimum, moderate or comfortable lifestyle"> It’s never too early – or too late- to start making extra contributions to your pension savings.<h2>How to save more with Additional Voluntary Contributions</h2>Additional Voluntary Contributions (AVCs) are flexible extra pension savings you can make from your pay (before tax is taken) on top of the normal contributions you make to your pension.<ul type="disc"><li>One of the perks of AVCs is that you don’t need to save a set amount every month. If you’ve got an expensive time coming up, you can reduce your contributions, or equally you can add more in if you have some to spare. </li><li>AVCs are a great way to save extra money for retirement if you get large payments that don’t qualify for your pension, such as overtime and bonus payments.</li><li>You’ll also get government tax relief on anything you put in up to your annual allowance - currently £40,000 for most people.  If you’re a high earner with an income of more than £200,000 a year, your annual allowance might gradually reduce to as low as £4,000 in the current tax year.</li></ul><h2>AVCs for defined benefit members</h2>The main AVC arrangement open to defined benefit (DB) members is called BRASS. When you join the Scheme, you’ll get a separate BRASS account, and your AVC contributions are then invested in a range of funds with the aim of building up extra pension savings over time. You’ll be able to <a href="https://member.railwayspensions.co.uk/my-rps" data-sf-ec-immutable="">log in to your account</a> (or <a href="https://member.railwayspensions.co.uk/register" data-sf-ec-immutable="">register</a>) any time to:<ul><li>make changes to the BRASS amount you contribute</li><li>view your investment fund holdings</li><li>see how the funds are performing</li><li>change the funds you invest in.</li></ul><h2>How much more should I save?</h2>If you’ve used the planning tools, you’ll have a better idea of how much more to save, to have the retirement you imagined. Some employers allow contributions to be paid via a ‘salary sacrifice’ arrangement, which reduces your National Insurance bill. And they may even increase the amount they pay into the scheme if you choose to save more. It’s worth checking! Most members making additional voluntary contributions pay in more than £100 per month, but you can put in as little as £10 per month and top up your regular payments or make one-off payments at any time. No matter how big or small your contribution, it all helps.There is a maximum amount that you can pay into BRASS. If you want to pay more AVCs, most members can apply to join AVC Extra. <a href="/knowledge-hub/help-and-support/RAYN">Check the Read as you Need guides</a> for the rules that apply to your section of the Scheme.<h2>AVCs for IWDC members</h2>If you’d like to make extra contributions, you’ll need to speak to your employer. The contributions will be deducted from your pay like your usual pension deductions. Get more information on BRASS and AVC Extra <a href="/defined-benefit-members/saving-more-BRASS-AVC-Extra">here</a>.<h2>What if the numbers don’t add up?</h2>The more you save now, the more time your money has to grow. Over the long-term, the investment returns on your AVCs could make a big difference to the amount you have to live on when you retire.<h2>Get advice before making any decisions. </h2>We can help you understand the Scheme rules that apply to you and tell you how it works, but we can’t give you advice relating to your personal circumstances. If you need help deciding what to do with your money, you’ll need to talk to a financial advisor. Liverpool Victoria has been carefully chosen to give members access to independent financial advice. LV can be contacted on 0800 023 4187. You are still free to choose your own Independent Financial Adviser. You can find an IFA in your area at <a href="https://www.unbiased.co.uk/" target="_blank" data-sf-ec-immutable="">unbiased.co.uk</a><a href="https://www.moneyhelper.org.uk/en" target="_blank" data-sf-ec-immutable="">Moneyhelper.org.uk</a> offers free support on a wide range of financial matters, online and over the phone.And there’s a wealth of information in the ‘Resources’ and ‘In the Scheme’ sections of the RPS website.<h3>Sources</h3>*  <a href="https://www.aberdeenplc.com/en-gb/news/all-news/uk-retirees-at-risk-of-running-pension-pots-dry" target="_blank" data-sf-ec-immutable="" data-sf-marked="">UK retirees at risk of running pension pots dry</a> ** <a href="https://www.barnett-waddingham.co.uk/comment-insight/research/gender-pension-gap/" target="_blank" data-sf-ec-immutable="">Bridging the gap: the gender pension gap and what can be done about it</a>

A guide to saving more with AVCs

How much will your retirement cost, and will you have enough to support the lifestyle you want?

15/9/2021

Author: Editorial

How much you’ll get is based primarily on:<ul><li>how long you’ve paid into the Scheme (your membership) and</li><li>your final average pay </li></ul>While knowing this in advance can help take away some of the worry, there are still 2 decisions you need to make. These are: <ol><li><a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/when-to-retire" style="font-family: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; font-size: inherit" data-sf-ec-immutable="" data-sf-marked="">When to retire with a DB pension</a></li><li><a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/ways-to-take-my-pension" data-sf-ec-immutable="" data-sf-marked="">How to take your DB pension</a> </li></ol>You can find a summary of your options for each point below. <h3>When to retire with a DB pension </h3>Many members in a DB pension scheme will stop work once they reach Normal Retirement Age (NRA). This is usually between 60 and 65 years old, depending on the section of the Scheme you’re a member of. You can check your NRA in your Member Guide. This can be found in the library section once you have logged in to your <a href="https://member.railwayspensions.co.uk/login" data-sf-ec-immutable="">myRPS</a> account.If you’re 55 or over (or 50 with a Protected Pension Age) you may be able to take early retirement. You may also be able to start taking your benefits early if you have to stop work due to ill health. Alternatively, you may be able to delay taking your pension up to the age of 75. Each of these options will have an impact on how much pension you receive each month and may have additional consequences, particularly if you decide to start claiming your benefits early and then return to work. You can find out more <a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/staying-in-work" data-sf-ec-immutable="" data-sf-marked="">here</a> We understand that when to retire is very much a personal choice and may depend on what you can afford to do, as well as when the rules will allow it. You can find out more about getting your pension savings on track, and what to do if the numbers don’t add up, such as making Additional Voluntary Contributions (AVCs) here <h3><span style="background-color: rgba(0, 0, 0, 0); font-size: var(--font-size-h1); font-weight: bold; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; font-family: "Open Sans Condensed", sans-serif; color: inherit"></h3><h3>How to take your DB pension </h3>There are 4 main ways to take your benefits from DB pension within the RPS. These are outlined below, although the rules of your specific section may vary so please check your Member Guide for more details. 1. Part lump sum/part pension – so you get some of your pension as a one off lump sum and the rest as regular pension payments. Depending on the rules of your section, you can usually decide how this is split, for example:<img src="https://cdn3.railpen.com/mp-sitefinity-prod/images/default-source/old-site-images/infographics/db-lump-sum-options_v01_bg-and-title.jpg?sfvrsn=8a94cbb7_5" style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; font-size: inherit" alt="Graphic showing that you can either take a larger lump sum and less pension OR a smaller lump sum and more pension">And generally, as long as the lump sum is worth 25% of your entire benefits, or less, then it will be tax free. 2. All pension – so you take all of your benefits as regular pension payments, and none as a lump sum. This may be restricted if you have paid any Additional Voluntary Contributions (AVCs) and by the rules of the particular section of the Scheme you’re paying into3. All cash –This is only possible in very limited circumstances, such as:<ul style="list-style-type: disc"><li>Under small pot/trivial commutation</li><li>Commutation on the grounds of serious ill health or</li><li>Short service leaver refunds</li></ul>And where the rules of your specific section allows.4. Transfer out – you may be able to transfer your entire DB pension to another type of pension within the RPS, or to a different provider all together. This will depend on whether or not you’re still paying in, the rules of your specific pension section and whether the new provider accepts transfers. You can also choose to transfer just your Additional Voluntary contributions (AVCs) if your section rules allow.  Transferring your pension does, however, carry significant risks and you should read the details <a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/transferring-my-pension" data-sf-ec-immutable="" data-sf-marked="">here</a> carefully, before making any decisions.  By law you will also need to get financial advice if you’re considering a transfer of DB benefits worth more than £30,000. In addition to these 4 main choices, you can also opt to tweak how you claim your benefits in a number of different ways. The first is to take a level pension option. This means taking more of your RPS pension before you reach State Pension age and then less RPS pension after you reach State Pension age. This is designed to make sure you have a consistent level of income throughout your retirement, as shown below:<img src="https://cdn3.railpen.com/mp-sitefinity-prod/images/default-source/old-site-images/infographics/pension-levelling_v02_horizontal.jpg?sfvrsn=3f0631f_7" alt="Diagram showing how pension levelling works, with levelling giving you a higher Scheme pension before State Pension age and a higher one afterwards.">The second option is to give up part of your pension to leave extra pension for your dependants. This would give a named dependent 15% more of your pension when you die, than they would have otherwise received as standard according to the rules of the Scheme. However, the money will be lost if your dependant dies before you do and you cannot change your named dependant once this option has been taken. Exactly how of your pension you give up will depend on your age and sex, as well as those of your dependant.You can read more about all of these options, including how they can be affected if you have any Additional Voluntary Contributions (AVCs) in our <a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/ways-to-take-my-pension" data-sf-ec-immutable="" data-sf-marked="">written guide</a> or <a href="https://member.railwayspensions.co.uk/knowledge-hub/help-and-support/video-library" data-sf-ec-immutable="" data-sf-marked="">short video</a> <h3>Making the right decision for you </h3>There’s a lot to consider here, but help is at hand.If you’re still paying into your pension, then you can get an idea of how much it might be worth when you retire by using the pension planner in your myRPS account. This will show you what your annual income could be when you stop work and how much you may be able to take as a tax-free lump sum.The planner will also let you see how this might change depending on how and when you choose to take your pension, for example if you go for the level pension option mentioned above. If you’re no longer paying into your pension (are a preserved member) you won’t have access to the pension planner, but you can still get an estimate of your pension benefits by logging in to your <a href="https://member.railwayspensions.co.uk/login" data-sf-ec-immutable="">myRPS</a> account.While the pension planner and estimates offer no guarantee of your future benefits, they will give you a rough idea of what your pension might be worth and give you a starting point for considering your options. From there, you may find it helpful to get 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 (IFA). You can find an IFA in your area at <a href="https://www.unbiased.co.uk/" target="_blank" data-sf-ec-immutable="">unbiased.co.uk</a>More free and general information is also available from <a href="https://www.moneyhelper.org.uk/en" data-sf-ec-immutable="">MoneyHelper</a>, sponsored by the Department for Work and Pensions.  You find more tips for making the right decision for you <a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/making-the-right-decision" target="_blank" data-sf-ec-immutable="" data-sf-marked="">here.</a> <h3>Applying for your pension</h3>Once you’ve decided how you want to go ahead, you will need to apply for your pension.You should do this around three months before you want payments to start, just to make sure there is time for everything to be processed. If you’re still paying into your pension, all you need to do is tell your employer that you’re ready to start claiming your benefits and they will tell the scheme administrator. If you’re not currently paying in (and are a preserved member) you’ll need to <a href="https://member.railwayspensions.co.uk/knowledge-hub/help-and-support/get-in-touch" data-sf-ec-immutable="">contact the scheme administrator</a> directly. You can find out more about applying for your pension <a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/applying-for-my-pension" data-sf-ec-immutable="" data-sf-marked="">here</a>

Your retirement options with a DB pension

As a member of a defined benefit (DB) pension scheme, you’ll get an income for life when you stop work.

16/5/2025

Author: Editorial

The answer is that this will depend on how long you’ve been a member, your Pay and the rules of the Section of the Scheme you are in. It’s a complex calculation and you may have several options, and the easiest, and most accurate way for you to get an understanding of what your DB pension benefits might be worth is to request an estimate in your <a href="/login">myRPS account</a> or by contacting us directly. If you still want to learn more about what your pension benefits are based on, then you’ll find an overview in your Member Guide and summarised below.  Please bear in mind that this is an illustrative, and generic example, to be used for information purposes only. Rules may vary by Section and outcomes will be highly dependent on your individual circumstances. If you’re a member of the Industry Wide Defined Contribution (IWDC), the value of your Personal Retirement Account (PRA) is paid in a different way. You can read more about that in a separate blog post: <a href="https://member.railwayspensions.co.uk/knowledge-hub/news-and-views/blog/rps-blog/2025/05/16/understanding-the-value-of-your-pra-for-iwdc" data-sf-ec-immutable="">The value of your PRA for IWDC</a>. <h3>The basis for a defined benefit calculation in the RPS </h3>In general, a defined benefit (DB) scheme like the Railways Pension Scheme (RPS), pays you a regular income for life when you retire. In most sections, this income is broadly based on your final or final average pay and how long you’ve been a member of the Scheme. You can also choose to take a tax-free cash lump sum. In this blog, we’ll use an example of how your pension and the separate tax-free cash lump sum would be calculated, if you had a final average pay of £50,000 and Scheme membership of 25 years and 30 days. This example does not include any Additional Voluntary Contributions (AVCs), including BRASS or AVC Extra, which can impact how your pension benefits are paid. Please visit the <a href="/defined-benefit-members/saving-more-BRASS-AVC-Extra">saving more area </a>to find out more about how you can take your BRASS or AVC Extra pots. If you are a member of a Career Average Revalued Earnings (CARE) DB arrangement in the RPS your calculation would be slightly different and you can find out more in your Member Guide. <h3>Example of how DB pension payments are calculated in the RPS</h3><img src="https://cdn3.railpen.com/mp-sitefinity-prod/images/default-source/infographics-(current)/how-an-rps-pension-is-calculated-v2.png?sfvrsn=17f72fae_3" width="800" alt="A graphic showing how a DB pension in the RPS is calculated">1. As outlined above, in many Sections, we use final average pay as a starting point for the pension calculations. This may be different in your Section of the Scheme and you can find more information in your Member Guide. For this example, we will use a final average pay of £50,000.  Final average pay is set by your employer and is defined as, your Pay or Pensionable Pay (whichever is higher) averaged over the 12 months before you: <ul><li>take your pension</li><li>leave the Scheme or </li><li>die</li></ul>Your Pensionable Pay is the amount of your total salary your employer decides is pensionable on the 1 April each year. You can find more definitions for key terms on the <a href="/knowledge-hub/help-and-support/glossary">glossary page</a>. 2. In most sections, in line with the Scheme rules, a value of 1.5 times the Basic State Pension is then deducted (or ‘offset’) from the calculation when your pension is worked out. <a id="_anchor_2" href="https://railpen.sharepoint.com/sites/CustomerExperienceFunction/ProjectsActive/RAIL/RPS/Web/RPS%20website%20-%202024%20onwards/Content/4%20-%20Knowledge%20hub/2%20-%20News%20and%20views/Blogs/Approved%20-%20how%20we%20calculate%20pension%20benefits%20blog%20v3.docx#_msocom_2" name="_msoanchor_2" data-sf-ec-immutable=""></a>This was originally included in the rules to ensure members would receive a good income after 40 years membership, relative to their final average pay, and when their Scheme pension was considered in combination with the State Pension. The amount of the Basic State Pension is set by the government. It can change over time and usually goes up every year. You can read more on the <a href="/pension-essentials/state-pension">State Pension webpage</a> or at <a href="https://www.gov.uk/browse/working/state-pension" target="_blank" data-sf-ec-immutable="" data-sf-marked="">gov.uk</a> For this example we have used £8,667 as the final average Basic State Pension amount. 3. We then divide the remaining total by 60<a data-sf-ec-immutable=""></a>This is based on the pension accrual rate set in the Scheme rules. 4. The final step is to multiply by the number of years and days of Scheme membership For example, if someone has been a member in the Section for 25 years and 30 days we would multiply by 25.082191. 30 days are divided by 365 days to give 0.082191 and with 25 years added, this gives a total membership period of 25.082191. That gives us the total yearly pension the member is entitled to, per year, before tax In this example, it would be £15,467 per year before tax is taken. In line with the scheme rules, we pay pensions on a four-weekly basis. Please remember that this is a generic example, and the figures may vary depending on your individual circumstances and options, for example if you choose to take a higher lump sum (see below), or have paid into BRASS. <h3>Example of how a lump sum is calculated in the RPS</h3><img src="https://cdn3.railpen.com/mp-sitefinity-prod/images/default-source/infographics-(current)/how-your-lump-sum-is-calculated.png?sfvrsn=d9842561_2" width="800" alt="An equation showing how a lump sum is calculated ">Generally, as a defined benefit member, you may be able to take up to 25% of your pension benefits (but no more than £268,275) as tax-free cash, with the rest being used for regular pension payments as outlined above. The rules of the RPS provide a lump sum, in addition to your Scheme pension. This is calculated separately and means you have to give up less of your Scheme pension if you want to take more tax-free cash.In this example the basic lump sum would usually be calculated as follows:1. Starting with final average pay We’ve used £50,000 again in this example but you can read more about how final average pay is defined in point 1 of the pension calculation above. 2. Dividing it by 40 This is based on the lump sum accrual rate set in the Scheme rules (and is different to the pension accrual rate outlined above).3. Multiplying that by the number of years and days of Scheme membership Again, we’ve used 25 years and 30 days for this example (25.082191) as per the pension calculations above. 4. This gives us the member’s basic lump sum amount In this case it would be £31,352 <h3>A few other factors to bear in mind… </h3>The calculations above, are intended as a generic illustration, based on the basic pension and lump sum amounts being paid at Normal Retirement Age or Normal Pension Age. However, there are other options to consider when taking your pension benefits. For example, you may be able to:<ul style="margin-left: 30px"><li>Take a higher cash lump sum (subject to limits) and less pension </li><li>Take a smaller cash lump sum and more pension </li><li>Take all your pension benefits as regular pension payments - this is only possible if the rules of your particular pension section allow it.</li><li>Take all your pension benefits as cash - this is only possible in limited circumstances. </li><li>Give up part of your own pension entitlement in order to give extra pension to your dependants. This is not the same as a spouse or dependants’ pension, which is paid from the Scheme to those who are eligible under the rules. </li><li>Take the level pension option – this means you can level out your pension benefits alongside what you will receive as your State Pension. With this option, you get more pension from the RPS before your State Pension age and then less pension from the RPS after your State Pension age</li><li>Take your benefits earlier, or later</li></ul><span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; word-spacing: normal; caret-color: auto; white-space: inherit">All of these options would affect the basic calculations outlined above.You can read more about your options for taking your pension benefits on the <a href="/defined-benefit-members/Im-planning-to-take-my-pension/ways-to-take-my-pension">ways to take my pension page</a>.  You can also use the pension planner in your <a href="/login">myRPS account </a>to see what your pension and tax-free cash payments might be worth when you retire. <a id="_anchor_9" href="https://railpen.sharepoint.com/sites/CustomerExperienceFunction/ProjectsActive/RAIL/RPS/Web/RPS%20website%20-%202024%20onwards/Content/4%20-%20Knowledge%20hub/2%20-%20News%20and%20views/Blogs/Approved%20-%20how%20we%20calculate%20pension%20benefits%20blog%20v3.docx#_msocom_9" name="_msoanchor_9" data-sf-ec-immutable=""></a>If you'd like more details about your estimated pension benefits and options, please request an estimate in your myRPS account or by contacting us directly. If you need help requesting an estimate online you can watch this short video guide:<div data-sf-ec-immutable="" class="-sf-relative" contenteditable="false" style="width: 560px; height: 315px"><div data-sf-disable-link-event=""><iframe width="560" height="315" src="https://www.youtube.com/embed/VALJs1qoyTw?si=Orofg4_PBcvxC6oo" title="YouTube video player" sandbox="allow-scripts allow-same-origin allow-presentation allow-popups"></iframe></div></div> We strongly suggest that you consider seeking independent financial advice before making any final decisions. You can find details about how to do that on the <a href="/pension-essentials/guidance-advice">guidance and advice page</a>.

How we calculate DB benefits

One of the questions we most often get asked, is how we work out what pension benefits a defined benefit (DB) member should get.

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