Has DC offer changed

[rogersh]

Edit copy of post by Robert T

"With those in the current DB scheme having a choice of Cash Balance or a Defined Contribution scheme with employer contributions of 13.6%.
While current DC scheme members(RMDCP) will have a maximum of 10% contribution off RM"

Has this situation changed ?

[RobertT]

RM released their latest pension proposal about 2 months ago now I think.

Here it is: https://www.myroyalmail.com/pensions/rm-pension-plan" onclick="window.open(this.href);return false;

EDIT: They released the details on 14 July. Not a bad guess

[rogersh]

Robert T thanks for the prompt response

My error.. I meant DC not DB. (now edited)

So my question remains is have RM raised the 10% - only today talking to an acting manager who is on the defined contribution scheme, as am I, seemed to believe an improvement was being offered but I believed we were still at 10% max employers contribution.

[RobertT]

Currently the maximum RM contribution into the RM Defined Contribution Plan is 9%, they are proposing increasing that to 10% from April 2018.

The proposals for current DB members is a 13.6% RM contribution into either Cash Balance or DC schemes, which would be as a 'new section' of the RMPP. Details in the link I provided.

[rogersh]

Thanks again Robert.

To be honest the confusion is not surprising when information is posted by R.M. repetitively....At a glance "We have improved offer on pensions" appears to mean another improvement for all.

[BeamishStout]

I must admit that I've not been on the ball with the DC plans as I will be almost unaffected by RM's plans from 1st April 2018 due to a decision to retire when I reach 60 (very early April).

Now it all becomes clear about the 2-tier pension provision (if I have read it right)

Either a maximum of 10% ( for those currently in RMDCP)

OR

For existing members of RMPP 13.6% (in either of their options)

Not sure how many of my colleagues at my LDO realise this because those who have got their heads around pension provision do so largely from a personal point of view ( 'I' not 'we' if you get my drift)

Badly done RM, badly done....

Whatever eventually happens with the pensions question future pension provision really should be the same for all employees.

Please feel free to correct me if any of the above is incorrect

[RobertT]

I agree the communications regarding the ‘improved’ pension proposals have been poor, but then again RM haven’t exactly been honest and forthcoming regarding all the other issues in this dispute either.

Although it has to be said, so far we have only had proposals – nothing is written in stone!
So the pension going forward could still turn out to be better, or if RM stick to what they’ve said about taking certain things off the table if we strike, we could yet end up back with the original DC proposal, or worse.

You can argue that everyone should be in the same pension and I’m not disagreeing. But to be fair we’ve effectively already got 4 different pension schemes – Sections A, B & C plus the RMDCP, with each one being worse than the previous offering.

The change from A to B happened in 1971 and from B to C in 1987, so it’s not something that’s particularly new.

[NWpostie]

When you say Cash Balance or Defined Contribution.


Is that to say at 60 you have the optin of taking the whole pension fund in one lump sum or leaving it in to pay out monthly for the rest of your life ?

[RobertT]

When you say Cash Balance or Defined Contribution.
Is that to say at 60 you have the optin of taking the whole pension fund in one lump sum or leaving it in to pay out monthly for the rest of your life ?

I received the info booklet on the CB/DC proposal this morning and it seems that the choices we have will be basically the same, regardless of which we choose.

Our pre 2018 benefits will stay the same, but with both CB & DC we will be building up a pot of money, with which we will have a few different choices. In effect everyone will be paying AVC’s!

We will have the option to use the accumulated money to fund the tax free lump sum, with any amount left over being taxed if also taking that as cash at the same time. Or you can transfer it to another pension provider to drawdown, or to buy an annuity(income for life).
There is no option to leave it with RM and get a pension from it!

What is unclear from the booklet is whether we will be able to access our ‘pots’ independently from the main scheme from age 55, which we can currently do with AVC’s. So another poorly written offering from RM, which asks more questions than gives answers!

[jetblack]

I received the info booklet on the CB/DC proposal this morning and it seems that the choices we have will be basically the same, regardless of which we choose.

Our pre 2018 benefits will stay the same, but with both CB & DC we will be building up a pot of money, with which we will have a few different choices. In effect everyone will be paying AVC’s!

Yep - thats my reading of it as well Robert - the difference being that the cash balance scheme will guarantee a certain level of payout.
That isn't a defined benefit scheme by my understanding of it - RMG are touting it as 'defined benefit' because they know full well that most won't know the difference. Kind of 'fake news', or some such

I've said it before and I'll say it again - the guaranteed payout from the RMG proposed DB cash balance scheme will be piss poor. Maybe in line with compounded interest rates (current BofE base rate is 0.25%). In other words, in real terms, we could well be losing money on it.

Unless anyone can enlighten me/us all on how the guaranteed payout will be arrived at ??

[RobertT]

Unless anyone can enlighten me/us all on how the guaranteed payout will be arrived at ??

Presumably the only guaranteed element will be the sum total of the contributions going in, with the ‘discretionary increases’ based on investment returns. They say the aim is 2% above the rate of CPI inflation(it’s in the small print).

But the problem with that is that it’s in RM’s interests to keep returns low and a so limit the long term liabilities of the scheme.

[k979aaa]

At the end of the day whatever they say or do can we trust them anymore NO!

[Spedley]

At the end of the day whatever they say or do can we trust them anymore NO!

That is what it boils down to. If you vote NO then all Royal Mail's promises mean nothing.