LTB 627/18 Pension Consultation

[Woody Guthrie]

Chill out Robert, you do get very testy.
The reason I think that the DBLSS will be kept in-house is because its assets and liabilities will have to be reported on our balance sheet, the reason I think RM will outsource the CDC pension in its entirety is because it doesn't have the expertise to manage a huge (collective) DC scheme, this scheme may expand beyond our business, it's cheaper and it's sensible to put some distance between the two. Most of the same reasons for placing the current individual DC scheme with Zurich.

I think they will be separate because it makes life easier for everyone except us and that tends to win the day but we'll see....and again chill. this is just a different potential outcome not a personal attack.

[RobertT]

Apologies if I was a bit abrupt, no offence meant.

The CDC scheme will almost certainly have trustees, it's covered on My Royal Mail where is says:

Who would be responsible for managing the investments in the CDC scheme?

We would expect the scheme to be set up as a trust, like the current RMPP. The board of trustees would be responsible for setting the investment strategy and managing the scheme’s investments.

Who is accountable if the scheme doesn’t deliver its target?

Under a CDC scheme, the target for what the employee receives in retirement is not guaranteed. The actual benefit payable will depend on the scheme’s investment performance (and once in payment can go down as well as up) and other factors such as average life expectancy of members.
We would expect the trustees of the CDC scheme would be responsible for setting the investment strategy and managing the scheme’s investments, but ultimately there is no guarantee as to the benefits that members will receive.

What is the governance under the CDC scheme to ensure that decisions around revaluations are appropriate?

We would expect matters such as how target benefits will be communicated to members and how increases are awarded (or not) to be set out in the scheme documents, but until the necessary legislation is in place we will not know what the actual requirements will be. 

To be fair there is no mention of who's going to run the DBLSS. But considering RM are guaranteeing a minimum amount, ultimately the buck stops with them. But still obviously managed by fund managers, etc that they appoint.

But just because the two schemes are managed by different entities doesn't mean they can't be linked when benefits are taken, as the situation with AVC's proves.

Have a nice day!

[stephen500]

I may take my NRA 60 a year early in 2020. I will look at the projections to see if it is worth me going into a new scheme for just one year as I will be leaving no later than Feb 2021.
Best of luck with the new scheme, the elephant in the room is brexit, a hard one could be bad for the scheme at the start.

[Woody Guthrie]

I think to be honest Stephen the chances of this scheme being up and running before 2021 are very slim. Both Royal Mail and the CWU were hoping that the primary legislation was already in place and it would only take secondary legislation to allow CDC pension regulation.

Unfortunately having read the consultation document it's clear that the government intends to lay down new primary legislation first. With the government in disarray over Brexit and the huge amount of new legislation that will surround leaving the EU I would imagine a low priority item like this where by their own admission outside RM there is little appetite for could be kicked down the road until after the next GE around 2022.

Again it's just an opinion but the political landscape right now would suggest that the government has bigger fish to fry.