Letter: Royal Mail pension proposals provide 'good and fair' outcome for members

Post by **TrueBlueTerrier** » 04 Oct 2017, 15:40

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Douglas Hamilton, the head of pensions strategy at Royal Mail, says its proposals are fair and about affordability not cost-cutting.
Dear Editor,

Your readers may have read about the changes Royal Mail needs to make to its defined benefit (DB) pension scheme.

Royal Mail has by far the best pension arrangements in the delivery industry. Over 60% of Royal Mail employees in the UK are in a DB pension scheme. The figure for the UK private sector as a whole is under 5%. Unfortunately, our current DB scheme is just not affordable. If no changes were made, annual contributions would increase next year from around £400m to around £1.2bn. That increase is at least three times more than our annual free cash flow. That's on top of what we already pay into the scheme. No business could do that.

We have never hidden the fact from our DB scheme members that the benefits they build up from April 2018 will be smaller than they are now. That's because the company cannot afford the plan in its current form. But with our current DB cash balance proposal we have moved a long way compared to the defined contribution (DC) proposal we originally put forward. Furthermore, this is not about cost-cutting. Royal Mail will continue to pay broadly the same in pension contributions after its proposed changes as it does now.

The Communication Workers Union (CWU) came forward with its 'Wage in Retirement' scheme, but, unfortunately, this scheme would not be sustainable, secure or affordable for the company or our employees. The CWU's scheme is an attempt to set up a defined ambition type scheme within the current defined benefit regulatory framework. Unfortunately that just doesn't work. Further, if our current DB scheme had adopted the CWU's proposed investment strategy in 2012 the company would already have had to close the scheme to future accrual, rather than being able to meet its commitment of keeping it open until March 2018,

In short, we've put forward a proposal which provides a good and fair outcome for members of our DB pension scheme. We're also proposing increasing Royal Mail's contribution to the Royal Mail DC plan, which benchmarks very well compared to other large employers in the UK.

Douglas Hamilton is head of pensions strategy at Royal Mail

oypostie · Post by **oypostie** » 04 Oct 2017, 16:02

Dear Douglas

I'm afraid the staff don't agree with you.
C-, must do better, try again

mark.cup · Post by **mark.cup** » 04 Oct 2017, 16:05

The new scheme is not defined benefit by it's true meaning... It does not provide any guaranteed income in retirement it is basically a DC type of arrangement but with some yet as unknown reassurances with regard to the lump sum it will pay

TheTrolleyMan · Post by **TheTrolleyMan** » 04 Oct 2017, 20:04

Can I have all my pension pot moved into a private pension scheme of my choice then !

rubberbond · Post by **rubberbond** » 05 Oct 2017, 07:26

I wonder what pension arrangements wee Dougie has.

k979aaa · Post by **k979aaa** » 05 Oct 2017, 19:15

Pensions strategy says it all does it not he has declared war upon our pensions and war he will get starting 19/10/2017 at 11:00 AM.

loyalsnail · Post by **loyalsnail** » 07 Oct 2017, 21:50

rubberbond wrote:I wonder what pension arrangements wee Dougie has.

The same as everyone else...

Post by **TrueBlueTerrier** » 08 Oct 2017, 08:30

loyalsnail wrote:
rubberbond wrote:I wonder what pension arrangements wee Dougie has.
The same as everyone else...

I sincerely doubt it. At a minimum, he is at the Director or Board Level. They tend to have their own arrangements, regrettably, I can't find any details on Royal Mail Pensions at their level though, hence this will probably remain an unconfirmed supposition on my part.

fishtank · Post by **fishtank** » 08 Oct 2017, 08:39

I don't think there is a Royal Mail senior management pension plan anymore, I think it closed to new entrants a good few years back. Now what tends to happen is they get an annual sum in lieu of a pension which is there's to invest ( or spend on sweeties ) as they wish. I think Moya's is somewhere around the £200k mark, not really the same as everyone else.

loyalsnail · Post by **loyalsnail** » 08 Oct 2017, 09:37

TrueBlueTerrier wrote:
loyalsnail wrote:
rubberbond wrote:I wonder what pension arrangements wee Dougie has.
The same as everyone else...
I sincerely doubt it. At a minimum, he is at the Director or Board Level. They tend to have their own arrangements, regrettably, I can't find any details on Royal Mail Pensions at their level though, hence this will probably remain an unconfirmed supposition on my part.

I sincerely know it

fishtank wrote:I don't think there is a Royal Mail senior management pension plan anymore, I think it closed to new entrants a good few years back. Now what tends to happen is they get an annual sum in lieu of a pension which is there's to invest ( or spend on sweeties ) as they wish. I think Moya's is somewhere around the £200k mark, not really the same as everyone else.

Exactly, no special arrangements for pension, just the bog standard RMPP / RMDC arrangements. Any lump sums which may or may not be paid on top of base salary are simply to bring the overall remuneration package in line with industry benchmarks. Historically RM have been able to offer salaries below benchmark due to the generous pension arrangements, if the pension changes then they may need to offer up a greater base pay to maintain position comparable to benchmarks but I don't imagine that the overall package will alter much, its composition will just shift away from pensions. Certainly for non-ops grades anyway.