Railway Pension Scheme

[fabs]

Hi

I've been fortunate to have been sucessful in joining a TOC. I am currently in the Forces and will leave with an immediate pension.

I broadly know about some of the employee benefits (free travel on TOC, 75% off others etc) but was wondering what percentage my pension contribution will be. I guessed at about 12%.

Thanks for your time.

 

[Stigy]

Hi

I've been fortunate to have been sucessful in joining a TOC. I am currently in the Forces and will leave with an immediate pension.

I broadly know about some of the employee benefits (free travel on TOC, 75% off others etc) but was wondering what percentage my pension contribution will be. I guessed at about 12%.

Thanks for your time.

I must admit I'm not 100% sure how these things work, but I pay around £190 a month which is around 8%...Unless I've completely cocked up of course! Congrats on the new job!

 

[JohnFM]

I have sent a PM Fabs.

 

[theironroad]

Each toc has a 'section' of the rail pension scheme, and each tocs pensions committee decides its own rate, depending on the forecasts, active employees versus retired members and the requirement for ht e section to have in place a plan to deal with any deficit as the scheme must have a plan in place to be 100% funded over a specified time frame.

For my toc, off my head, 12% is pretty close. Think it was 11.25 but cant remember the last change. As it is a shared scheme, for every 40p contributed by the employee, the employer contributes 60p unless contribution holidays are in place, which is more unlikely these days.

 

[Hoody]

Hi,

I'm in a similar position where I will hopefully be starting with a TOC in the next couple of months but I've not been able to get any info on the pension. I've now got a rough idea as to what this will cost me per month but does anyone know roughly what someone will get out of it at the end.

Cheers

 

[Jonfun]

You'll get a pension and a lump sum - I think mine works out as (years in scheme/60) * salary on retirement; which then will decrease the bigger the lump sum you choose to take. You can make additional voluntary contributions through a scheme called BRASS to up the lump sum without affecting your pension if you're in a position to do so. When you're up and running, there's a handy calculator on the pension scheme website that allows you to see how much you could get.

Note - each section is likely to be similar, but may well have it's own different rules, so you'd be advised to check with someone working for your TOC.

 

[Hoody]

Jonfun, thanks very much for that. Nice to know that if I want I can top it up.

 

[theironroad]

BRASS is the rail industry's AVC scheme, iirc brass stands for British rail additional superannuation scheme, but I stand to be corrected on exact word lol

For most new entrants to brass there is no matching contribution from the employer, but it does have the advantage that it is taken from pre tax pay.

There is a maximum that can be paid into brass, depending on headline pay, but after that rail pension scheme offer a further scheme which iirc is called 'avc extra' with sam tax benefits upto a limit. Google rail pension scheme and you'll get some info.

 

[theageofthetra]

Wondered what BRASS stood for!

 

[whoosh]

You'll get a pension and a lump sum - I think mine works out as (years in scheme/60) * salary on retirement; which then will decrease the bigger the lump sum you choose to take. You can make additional voluntary contributions through a scheme called BRASS to up the lump sum without affecting your pension if you're in a position to do so. When you're up and running, there's a handy calculator on the pension scheme website that allows you to see how much you could get.

Note - each section is likely to be similar, but may well have it's own different rules, so you'd be advised to check with someone working for your TOC.

I believe it is (no of years in scheme/60) * PENSIONABLE SALARY on retirement.


Pensionable salary is usually your basic pay MINUS one and a half times the State Pension. The percentage you pay into your pension is also based on this as well.

That's my understanding, and it's an important difference as it gives a lower yearly pension figure than some expect.

 

[FlashingYellows]

I believe it is (no of years in scheme/60) * PENSIONABLE SALARY on retirement.





Pensionable salary is usually your basic pay MINUS one and a half times the State Pension. The percentage you pay into your pension is also based on this as well.



That's my understanding, and it's an important difference as it gives a lower yearly pension figure than some expect.

So my understanding of this at £45000 with 30 years service would be 30/60 = 0.5 x 33202.50 (45000-11797.50 (151.25 basic pension x 52 + 1/2)) = £16601?

 

[Andrew1395]

It depends on each employer. For example my rail employer has three rates of contributions into railway pension scheme. The highest is for people with indefisiable right to a pension as per the conditions pre 1994 that's 13 3/4% the new entrants are at 8% but they cannot get their pension until 65 where as others can get there's at 50. New entrants contributions and benefits are quite distinct to old members of the scheme. I doubt many new entrants will have an option to get final salary at 60 and most will have capped pensions. A quick guide is to google RMT + employer (put your employers name) pension. They RMT lists all the schemes

 

[whoosh]

So my understanding of this at £45000 with 30 years service would be 30/60 = 0.5 x 33202.50 (45000-11797.50 (151.25 basic pension x 52 + 1/2)) = £16601?

My maths is:

Basic State Pension is currently £115.95 per week. £115.95 x 52 = £6029.40 per year.
6029.40 x 1.5 = £9044.10

So if you earn £45,000 per year, your PENSIONABLE PAY is 45,000 - 9044.10 = £35,995.90
Your pension contributions per year are 'whatever percentage payable in your part of the scheme' of £35,995.90.
Your pension from the scheme is (number of years in the scheme /60) x pensionable pay,
so in the above case it's (30/60) x 35,995.90 =£17,997.95.

You also get a lump sum as well, or can trade in some of the pension for more log a lump sum, or vice versa.

The Railway Pension Scheme is something called 'Contracted Out', which means it has been contracted out of the 'Second State Pension'. You are only entitled to the basic state pension and instead of receiving a top up of 'Second State Pension', you've got your Railway Pension. Both the Railway Company and employee have benefitted from paying a slightly lower National Insurance contribution during this arrangement.
However, from next year, there won't be a 'Second State Pension' -it'll all be one slightly bigger Basic State Pension, but people who have been 'Contracted Out' will not be entitied to the full amount. The Government have yet to release information about how the figures for this will work (how much deduction for how many years contracted out etc.).
Whether the Railway Pension Scheme will change it's formula for calculating the pension you get, in light of the Government's changes, I don't know.
Railway employees will be paying slightly more National Insurance from next year, and it's unclear on whether the Rail Companies will absorb their increased National Insurance contributions or pass this extra cost onto the staff in one way or another.

That's my understanding anyway.

 

[FlashingYellows]

Thanks Whoosh, all interesting stuff. I'm not sure where I got my state pension rate from but noticed after a little more research that it wasn't quite as generous as I'd thought.

Your calculations are in line with the pension forecast I get on the railway pension website so I've at least got some idea of when I can call it a day and head for warmer climes.

 

[Nuttytoffee]

On a weekly basis, I was paying around £30 a week into my pension whilst training. Now I am qualified it has gone up to around £74 a week.