Getting the most out of your RMDCP pension

If you’re an ‘active’ member who has been with Royal Mail for more than 12 months, check your most recent benefits statement to check which tier of contributions you are on. If you’re not on a Standard Tier you’re contributing 5%, but Royal Mail are only adding 4%, so you’re saving a total of 9% of pay into your pension pot.

If you switch to the Standard Tier 2, you will continue to contribute 5% but Royal Mail will add 9% so you’ll save a total of 14% of pay into your pension pot.

If you can afford it, why not switch to the Standard Tier 3 – you will contribute 6% and Royal Mail will add 10% (so you’ll save a total of 16% of pay into your pension pot – how good is that)?

To change your contribution rate, please complete a Choices form.

If you expect to retire much earlier or much later than your selected retirement age, it’s important to let Scottish Widows know so that they switch your pot into lower risk funds at the appropriate time.

In your earlier years, your pot is invested in funds which have the potential to achieve higher returns but can be volatile. When you near retirement and need greater certainty, your pot is moved to lower risk funds which aim to protect the pot’s value. In the default lifecycle fund, the move into the protection phase starts ten years before your selected retirement age.

To change your contribution rate, please complete a Choices form.

This helps the Trustees decide who should get any benefits on your death. To advise Scottish Widows of your wishes, please complete an Expression of Wish form.

An expression of wish form only relates to benefits that are distributed at the Trustees’ discretion from a pension plan. On death, you would probably have assets which are unrelated to any pension plan (for example, your home (if you own it), a car, bank account and any other savings and/or investments). If you don’t leave a will, these assets will be distributed to your next of kin in line with the standard ‘intestacy provisions’– these might not distribute them as you would wish.

So, in addition to completing an expression of wish, do please give some thought to whether you need to make a will, to make sure your assets go to the people you want to have them.

The ‘default’ Lifecycle assumes that you’ll take all your member account a lump sum (as opposed to a monthly / yearly income). If you expect to buy an annuity (to pay you a regular income for the rest of your life) or to keep your member account invested beyond retirement (and to take it as instalments over a number of years), other investment strategies may be more suitable.

The default strategy assumes that you’ll take your pot as one or two lump sums. This has focused on those with a pot of less than around £25,000 … or others for whom the idea of taking their pots as cash resonated well. However, if your aspiration is to use your pot to buy an annuity or to draw down over many years then please read pages 10 to 14 of the Plan Guide.

To change your contribution rate, please complete a Choices form.

It might be worth transferring these into the RMDCP. Old pots might have higher charges … and if you transfer them, there are fewer pots to keep track of too!

However, some older policies have valuable guarantees. In particular. there may be guaranteed rates for converting the pot to a pension (often referred to as a ‘Guaranteed Annuity Rate’). Before transferring these pots into the RMDCP, please make sure that you are not foregoing a guarantee that you’d value.

If you are interested in transferring benefits, please contact the Plan’s Administrator, Scottish Widows.