The RPS is a defined benefit (DB) arrangement, meaning your RPS pension benefits are calculated using a fixed formula and are not solely reliant on contributions and investment returns.
Your RPS pension benefits are based upon your final average Pensionable Pay (your Pensionable Pay averaged over the 12 months before you retire, leave the RPS or die), multiplied by your total years and days of RPS Section specific membership and divided by the benefit accrual rate.
There are slight differences in how RPS pension benefits are calculated in the RPS60 and RPS65.
RPS60
Before your RPS pension benefits are calculated, there is a Basic State Pension Deductor (BSP Deductor) applied to your final average Pensionable Pay. In RPS60, this is 150% of the Basic State Pension).
For example, if you have a final average Pensionable Pay of £30,000, a deduction of £12,183.60 (150% of the Basic State Pension for tax year 2023/24) will be applied, resulting in a final average Pensionable Pay of £17,816.40 (£30,000 – £12,183.60).
Your RPS60 pension would then be calculated as follows:
As an RPS60 member you will also be entitled to an automatic tax-free cash lump sum.
This is calculated based upon your total years and days of RPS Section specific membership, divided by the lump sum accrual rate and multiplied by your final average Pensionable Pay as follows:
When calculating your RPS60 pension benefits, Pension Restructuring Premiums (PRPs) will be included if applicable. Please see the section RPS Pay for further information on PRPs.
RPS65
Similar to the RPS60, before your RPS pension benefits are calculated, there is a Basic State Pension Deductor (BSP Deductor) applied to your final average Pensionable Pay. In RPS65, this is 75% of the Basic State Pension).
For example, if you have a final average Pensionable Pay of £30,000, a deduction of £6,091.80 (75% of the Basic State Pension for tax year 2023/24) will be applied, resulting in a final average Pensionable Pay of £23,908.20 (£30,000 – £6,091.80).
Your RPS65 pension would then be calculated as follows:
RPS65 members do not automatically accrue a tax-free cash lump sum. However, at retirement you can exchange some of your RPS65 pension into a tax-free cash lump sum.
For both RPS60 and RPS65 members, you can view the current value of your RPS pension benefits by logging in to your RPS Member Account.