Introduction

Members can take their full pension benefits at their Normal Pension Age (NPA). For most, this will be age 60 or 65 but it’s not the same for everyone.

Most members can also take their benefits earlier or later than their NPA, but there are some instances where they may not be allowed to; for example, if retiring early means a member’s pension falls below their Guaranteed Minimum Pension.

Members are usually also able to swap up to 25% of their benefits for tax-free cash.

On top of the pension increases provided by legislation and the Fund Rules, the Trustee may exercise its discretion to award a discretionary increase after consideration of various factors. However, they have not made any of these discretionary increases in recent years.

Resources available to members

There are a number of resources available to members to help them make retirement decisions. Some of them can only be accessed by the member when they log in to their pension record.

Please encourage your clients to use these and think carefully before they make any retirement decisions.

Getting the right quote

Members are able to get an illustration of what they have built up in the Fund so far, and what they may get when they come to take their pension, by running a quote on their Pension Record. Quotes are calculated based on which schedule of the Fund they are a member of, as well as their personal details, such as their NPA.

There are many different types available, and these change depending on the age of the member.

Retiring early

Members can retire from age 55 with Trustee or bank consent (which is nearly always given). They may also be able to retire earlier than this if they are ill – but these requests would need to be referred to our occupational health advisers before they can be considered.

No member of the Group Fund has a protected retirement age below 55.

If a member retires earlier than their Normal Pension Age (NPA), we’ll reduce their pension to take account of the fact that they’ll be receiving it for longer. We reduce it by using an Early Retirement Factor (ERF).

If the member joined the Retiring Age 65 Schedule, they’ll have different NPAs for different parts of their pension, so we’d carry out a split calculation.

Early retirement factors (ERFs)

• The NatWest, Group, Coutts and NatWest Markets schedules

  • Excess pension over GMP is worked out as 0.962 x (number of years and months early). To calculate the ERF we use a compound method, for example, a member retiring 4 years 6 months early would have an ERF of 0.840 calculated as 0.962^4.5.

  • GMP pension is worked out as 0.968 x (number of years and months early). This rate applies to active members currently retiring or deferred members who left after 05/04/2017. For deferred members who left before this date, different ERF rates apply:

    Deferred Member GMP Factor

    Date of Leaving	GMP Factor (ERF)
    Date of LeavingBefore 05/04/1988	GMP Factor (ERF)1.015
    Date of LeavingBetween 06/04/1988 and 05/04/1993	GMP Factor (ERF)1.006
    Date of LeavingBetween 06/04/1993 and 05/04/1997	GMP Factor (ERF)1.001
    Date of LeavingBetween 06/04/1997 and 05/04/2002	GMP Factor (ERF)0.994
    Date of LeavingBetween 06/04/2002 and 05/04/2007	GMP Factor (ERF)0.978
    Date of LeavingBetween 06/04/2007 and 05/04/2012	GMP Factor (ERF)0.973
    Date of LeavingBetween 06/04/2012 and 05/04/2017	GMP Factor (ERF)0.980
    Date of LeavingAfter 06/04/2017	GMP Factor (ERF)0.968

    The ERF is worked out using a compound method.

• The RBS schedule

  • Excess pension over GMP is worked out as 0.962 x (number of years and months early). To calculate the ERF we use a compound method, for example, a member retiring 4 years 6 months early would have an ERF of 0.840 calculated as 0.962^4.5.

    For leavers pre 01/01/1991, the ERF pension will have a non-revaluing element and the ERF applied to non-revaluing element of the excess pension is 0.936 ^ term from the early retirement date to the member’s Normal Pension Age (NPA). This is applied using a compound method.

  • GMP pension for women is worked out as 0.968 x (number of years and months early). This rate applies to active members currently retiring or deferred members who left after 05/04/2017. For deferred members who left before this date, different ERF rates apply:

    Deferred Member GMP Factor

    Date of Leaving	GMP Factor (ERF)
    Date of LeavingBefore 05/04/1988	GMP Factor (ERF)1.015
    Date of LeavingBetween 06/04/1988 and 05/04/1993	GMP Factor (ERF)1.006
    Date of LeavingBetween 06/04/1993 and 05/04/1997	GMP Factor (ERF)1.001
    Date of LeavingBetween 06/04/1997 and 05/04/2002	GMP Factor (ERF)0.994
    Date of LeavingBetween 06/04/2002 and 05/04/2007	GMP Factor (ERF)0.978
    Date of LeavingBetween 06/04/2007 and 05/04/2012	GMP Factor (ERF)0.973
    Date of LeavingBetween 06/04/2012 and 05/04/2017	GMP Factor (ERF)0.980
    Date of LeavingAfter 06/04/2017	GMP Factor (ERF)0.968

    The ERF is worked out using a compound method.

  • GMP pension for men is worked out as 0.936 x (number of years and months early). This rate applies for active and deferred members irrespective of when they left service. The ERF is calculated using a compound method.

Retiring late

Deferred members will get a higher pension if they retire after their Normal Pension Age (NPA). We’ll apply an uplift factor for each year and complete month that the member takes their pension after their NPA.

For active members, how we’d increase any pension if the member retires after their NPA depends on if they’d joined the NPA 65 Schedule.

More about NPA 65

For all members we apply an uplift factor to the total pension, including any GMP.

Late retirement uplift factors

• The NatWest, Group, Coutts and NatWest Markets schedules

  Main Fund Section Late Retirement Factors

  Years retiring late	Late Retirement Factor
  Years retiring late0	Late Retirement Factor1.000
  Years retiring late1	Late Retirement Factor1.027
  Years retiring late2	Late Retirement Factor1.055
  Years retiring late3	Late Retirement Factor1.084
  Years retiring late4	Late Retirement Factor1.116
  Years retiring late5	Late Retirement Factor1.150
  Years retiring late6	Late Retirement Factor1.187
  Years retiring late7	Late Retirement Factor1.227
  Years retiring late8	Late Retirement Factor1.269
  Years retiring late9	Late Retirement Factor1.314
  Years retiring late10	Late Retirement Factor1.362
  Years retiring late11	Late Retirement Factor1.413
  Years retiring late12	Late Retirement Factor1.467
  Years retiring late13	Late Retirement Factor1.525
  Years retiring late14	Late Retirement Factor1.587
  Years retiring late15	Late Retirement Factor1.653
  Years retiring late16	Late Retirement Factor1.724
  Years retiring late17	Late Retirement Factor1.799
  Years retiring late18	Late Retirement Factor1.880
  Years retiring late19	Late Retirement Factor1.966
  Years retiring late20	Late Retirement Factor2.059

  Notes

  1. These factors are effective for members retiring on and from 1 February 2018.
  2. 'Years retiring late' is the number of years between the actual age of retirement and the age specified in the Rules by reference to which late retirement uplifts should be calculated.
  3. Factors are applied to the accrued pension revalued for the period up to the actual age of retirement. For pensions not subject to revaluation in deferment, a further uplift should be applied. This uplift is equal to the revaluation which would have applied during the period between actual age of retirement and the age specified in the Rules by reference to which late retirement uplift should be calculated, had the member been entitled to RPI capped at 3% p.a. revaluations in deferment.
  4. Factors for intermediate years should be calculated by interpolation of the factors above.

• The AA section

  AA Section Late Retirement Factors

  Years retiring late	Late Retirement Factor
  Years retiring late0	Late Retirement Factor1.000
  Years retiring late1	Late Retirement Factor1.035
  Years retiring late2	Late Retirement Factor1.073
  Years retiring late3	Late Retirement Factor1.111
  Years retiring late4	Late Retirement Factor1.153
  Years retiring late5	Late Retirement Factor1.198
  Years retiring late6	Late Retirement Factor1.246
  Years retiring late7	Late Retirement Factor1.297
  Years retiring late8	Late Retirement Factor1.352
  Years retiring late9	Late Retirement Factor1.411
  Years retiring late10	Late Retirement Factor1.473
  Years retiring late11	Late Retirement Factor1.539
  Years retiring late12	Late Retirement Factor1.609
  Years retiring late13	Late Retirement Factor1.684
  Years retiring late14	Late Retirement Factor1.765
  Years retiring late15	Late Retirement Factor1.851
  Years retiring late16	Late Retirement Factor1.942
  Years retiring late17	Late Retirement Factor2.041
  Years retiring late18	Late Retirement Factor2.146
  Years retiring late19	Late Retirement Factor2.259
  Years retiring late20	Late Retirement Factor2.380

  Notes

  1. These factors are effective for members retiring on and from 1 February 2018.
  2. 'Years retiring late' is the number of years between the actual age of retirement and the age specified in the Rules by reference to which late retirement uplifts should be calculated.
  3. Factors are applied to the accrued pension revalued for the period up to the actual age of retirement. For pensions not subject to revaluation in deferment, a further uplift should be applied. This uplift is equal to the revaluation which would have applied during the period between actual age of retirement and the age specified in the Rules by reference to which late retirement uplift should be calculated, had the member been entitled to CPI capped at 5% p.a. revaluations in deferment.
  4. Factors for intermediate years should be calculated by interpolation of the factors above.

  Note: If an active member in the RBS schedule did not join the Retiring Age 65 Schedule, they will get the better of additional service or pension calculated at NPA increased in line with these factors. As above, any Late Retirement Factors are applied to the total pension, including any GMP. This does not apply to those members who belong to the AA section.

Taking tax-free cash

On retiring, members can usually swap up to 25% of the value of their expected pension for tax-free cash. We work out how much cash they can get for each pound of pension income by applying a commutation factor.

Current commutation factors

Taking APeCs/AVCs

Members who still work at the bank can boost their retirement savings by paying Additional Pension Contributions (APeCs) into the Fund.

Here are some facts about APeCs:

• APeCs are Defined Contribution (DC) benefits
• members can choose how to invest their APeCs from a range of investment options
• APeCs are deducted from a member’s salary before tax, meaning they get tax relief at their highest rate and can save on National Insurance contributions automatically each month through payroll. Members can set this up at any time through RBSelect
• members need to be aware of Annual Allowance and Lifetime Allowance limits when contributing APeCs.

When a member takes their APeCs, they can:

• use them to fund a tax-free cash lump sum, therefore increasing the amount of Defined Benefit pension they take from the Fund
• buy an annuity on the open market
• drawdown income over the long term by transferring their APeCs out of the Fund into another approved DC arrangement
• if a member’s APeCs exceed 25% of the value of their benefits that can be taken tax-free cash, they can take the balance of their APeCs as taxable cash.

The value of a members’ APeCs will depend on several factors including the amount of APeCs paid over time, the age at which they take their benefits, the performance of APeC investments and any charges payable when they make their choice on how to take their APeCs (like transfers, or on purchasing an annuity).

If a member dies before drawing their pension, the value of their APeCs will be paid to their beneficiaries as a tax-free lump sum.