pensions deficit

[shadow]

I want to know if it was the government that spent our money from the pension fund why don't the CWU take them to court to force them to pay it back. Please advise if I am right in thinking it was the government that stole it.

[RobertT]

The main reasons that caused the deficit are:

1) RM taking a 13 year payment holiday.
2) Many of the investments were in equities/shares which have gone down in value and are not expected to regain their value.
3) Everyone is living longer so pensions have to be paid out for longer.

The government haven't stolen anything from the pension scheme.

[vanman]

Whilst it's true to say the Government hasn't stolen anything from the fund. What the Tory Government of the time did was to use Royal Mail as a "cash cow".

During the years Royal Mail took it's pension holiday, the Government creamed off millions into the exchequer as part of the profit target ("external financing limit") they set the business.

In effect the money not paid into the Pension fund went to the Government. Instead of being used to ensure the future stability of the fund and to provide investment into RM that we all know has been long overdue.

By the way - you can't sue the Government for it. Just make sure you don't elect the same lot who did this as next time they'll do far worse.

[rockytony67]

I emailed Dave Ward on 15/4/08 about any chance of a legal challenge, here's his reply, hope its informative for you.

Dear Tony



Re: Legal Challenge to RM Pension Changes



Thank you for your e-mail dated the 24th March, can I firstly apologise for the delay in responding – this is due to the volume of work in the department at the present time.



The merger of the schemes that you refer to in your e-mail which took place in 2000 was for funding purposes only there was no actual merger of the schemes as far as the benefit structures were concerned. In fact, as you are more likely well aware, the section A and B schemes closed to new members in 1987 and the section C scheme (POPs) was launched at the same time. To reduce the operational costs of running the two separate schemes as far as their investment portfolio was concerned, it was agreed that for ease of managerial cost the schemes should be merged. In the year 2000 this was carried out as both schemes were declared as being in deficit at that time.



At the time of the merger the CWU did secure a number of benefit improvements for our members in the section C scheme. In particular we secured the freezing of the lower earnings deduction at the sum of £3,328. We also introduced a process for establishing pensionable pay as being the best of the last three years of the best three in the last 10 years.



Additionally you make two other points, the first being the pensions holiday incurred by the Post Office staff superannuation scheme. You are right to raise this particular issue although I would indicate to you that firstly the Union did challenge the right of Royal Mail to take the pension contribution holiday and our legal advisors at the time indicated that there were no grounds for us to press any form of legal challenge as far as this issue was concerned.



Secondly, as far as the POPs scheme was concerned, this had always been in deficit including at the time of the merger.



Finally, at the start of the consultation procedure which has recently concluded the Union did seek formal legal advice. Our legal advisors, Mayor-Brown indicated to us that Royal Mail were carrying out and working within the legislative arrangements covered by the various Pensions Acts and in particular were also working within the schemes rules and trust deeds. Therefore the actions that they were able to take and are continuing to pursue, as far as pension reform is concerned, are legally compliant.



I do hope the above goes someway to providing you with the clarification you are seeking. If you require any further clarification or information please do not hesitate to contact me.



Yours sincerely,





Dave Ward

Deputy General Secretary

CWU

[TrueBlueTerrier]

The main reasons that caused the deficit are:

1) RM taking a 13 year payment holiday.
2) Many of the investments were in equities/shares which have gone down in value and are not expected to regain their value.
3) Everyone is living longer so pensions have to be paid out for longer.

The government haven't stolen anything from the pension scheme.

Didn't Brown also change the Tax rule on Pension Funds as well - that certainly would have added to the deficit.

[shadow]

13 years wow thats some holiday.

[belle smith]

The main reasons that caused the deficit are:

1) RM taking a 13 year payment holiday.
2) Many of the investments were in equities/shares which have gone down in value and are not expected to regain their value.
3) Everyone is living longer so pensions have to be paid out for longer.

The government haven't stolen anything from the pension scheme.

Didn't Brown also change the Tax rule on Pension Funds as well - that certainly would have added to the deficit.

all relevant and you can throw in the change in accountance standards from SSAP24 to FRS17 as well.

but

The immeadiate and most pressing problem facing the pension scheme, Royal Mail and the goverment is complying with the 2004 Pensions Act.
this Act establised the The Pension Regulator & The Pension Protection Fund
The PPF offfers protection to pension members if their scheme fails, the trade off is that DB pension schemes are subject to much more stringent regulation.

The specific section of the 2004 Pension Act that is the immediate problem is section 90

The Pension Regulator
Under the provisions of the Pensions Act the Pension Regulator is requiered to issue a code of practice on funding defined benifits under sections 90(2)(a),90(2)(b) and 90(2)(g) of the Pensions Act 2004. Codes of practice provide practical guidelines on the requierments of pensions legislation and set out the standard of conduct and practice of those who must meet these requierments. the intension is that the standards set out in the codeare consistentwith how a well-run pension scheme would choose to meet it's legal obligations.

That is what is reffered to here http://www.royalmailchat.co.uk/communit ... 27&t=18170" onclick="window.open(this.href);return false;

Under laws supervised by the Pensions Regulator, pension scheme trustees and employers have to agree a plan for the employer to pay off any deficit in its pension fund, usually within 10 years.

I would emphasis that it says usually. That ( 10 years) depends on the ability of the employer to repay the deficit or (employer covenant) and Royal Mail falls into the unusal category being balance sheet insolvent! and as such would have to repay it immeadiatly
http://www.royalmailchat.co.uk/communit ... 27&t=14612" onclick="window.open(this.href);return false; 2nd link

Deficit recovery period
As stated in my earlier letters, the trustee had previously regarded deficit recovery period of 10 to 15 years as the normal range for a pension scheme where yhe sponsering employer has a strong covenant. I also reffered to the emerging views of the Pension Regulator and a prospect of an automatic query if the deficit recovery period is greater that 10 years.

1st link

The current pension deficit which on the FRS17 basis, as you state,is considerably larger that the net assets of Royal Mail.

and

Where the covenant is uncertain, trustees require a far shorter period, or indeed immediate deficit repair.

letter without link

clarify the trustee position regarding the deficit recovery period

hi-lighted

http://www.royalmailchat.co.uk/communit ... 27&t=14586" onclick="window.open(this.href);return false;

will eventually finish this post.......but not today.....sorry TBT but good info on Pens act 2004

[TrueBlueTerrier]

The main reasons that caused the deficit are:

1) RM taking a 13 year payment holiday.
2) Many of the investments were in equities/shares which have gone down in value and are not expected to regain their value.
3) Everyone is living longer so pensions have to be paid out for longer.

The government haven't stolen anything from the pension scheme.

Didn't Brown also change the Tax rule on Pension Funds as well - that certainly would have added to the deficit.

all relevant and you can throw in the change in accountance standards from SSAP24 to FRS17 as well.

but

The immeadiate and most pressing problem facing the pension scheme, Royal Mail and the goverment is complying with the 2004 Pensions Act.
this Act establised the The Pension Regulator & The Pension Protection Fund
The PPF offfers protection to pension members if their scheme fails, the trade off is that DB pension schemes are subject to much more stringent regulation.



tierd....will edit/finish later zzzzz zzzz zzz

is this any good in explaining it - if so I will plow through it over the weekend: http://www.jonesday.com/files/Publicati ... nor%29.pdf" onclick="window.open(this.href);return false;

[heapsy]

So basically between RM and the Government they stitched us up.