Pension Contributions

D125 · Post by **D125** » 27 Feb 2018, 18:13

What will be the 'normal' contribution amounts (pounds & pence) for the New DBDC Pension and the CDC pension if instigated?

I am not entirely sure what counts as pensionable pay under either scheme.

Spedley · Post by **Spedley** » 27 Feb 2018, 20:51

I got the impression it was the full £412 p/w and overtime. But yes, I agree - this isn't clear.

Post by **RobertT** » 28 Feb 2018, 03:46

The transitional DBCBS will continue to have the same definition of pensionable pay as now.

The CDC will include full basic pay and pensionable allowances. So they’ll be no LEL reduction for section C members.

I doubt if overtime will be included.

D125 · Post by **D125** » 28 Feb 2018, 15:26

Just read my Pension Review Update and none the wiser… I keep paying the Bonusplan for the moment but none of the examples come close to my situation - not sure if I know anyone who comes even close!?!

Post by **stephen500** » 28 Feb 2018, 16:08

D125 wrote:What will be the 'normal' contribution amounts (pounds & pence) for the New DBDC Pension and the CDC pension if instigated?

I am not entirely sure what counts as pensionable pay under either scheme.

RMPP members: Page 11 (pensions review update booklet) DBCBS Scheme
"The same definition of pensionable pay continues as currently under RMPP"
Note section C up rates continue at RPI to a max of 5%, whereas Section B also increase but with no cap.
Pensionable pay and allowances are the same as we currently have.
I note on page 12 and 13.
Section B and C members contribute 6%, HOWEVER an interesting difference between DBCBS (page 12) and RMDCP (page 13) is that the DBCBS schemes does not seem to include "PSE".
Does this mean that for contribution purposes members of both schemes can pay in 6% yet, DBCBS not not enjoy the benefits of the PSE scheme?
The RMDCP has a variable contribution rate of between 4% and 6% with the company's contribution on a sliding scale reflecting your contributions (page 13) from 7% to 9%
The new CDC contribution rate is 6% with an option to increase it by 1% to retire at 65 instead of 67.

Added years contributions cease for RMPP members on 31st March 2018
You can make AVC payments to the RMDCP scheme. Any bonus plan or Flexiplan contributions current RMPP members make will cease if you join RMDCP.
If you remain in DBCBS then there will be no change to Bonus plan or Flexiplan arrangements. Add plan ceases on 31 March 2018.

Note Pensionable pay for RMDCP is basic pay only. No pensionable allowances or bonuses.(page 14)

Note New CDC scheme when up and running would see RMDCP members finally receive pensionable pay that includes "pensionable allowances", although that would only apply once that scheme was up and running and would not cover the gap years between 31 March 2018 and the new CDC scheme starting.

My personal view is that the new CDC scheme could only start at the beginning of a financial year.
Ie if the CWU and RM get the change to legislation to introduce the scheme in Nov 2018, then I presume it would start in Apr 2019.
Likewise Nov 19, seeing an introduction date of Apr 20 and so on.

vmaxv4 · Post by **vmaxv4** » 28 Feb 2018, 16:28

This is a good starting point to making my decision!!
DBCBS
Annually £5300
RMDCP
Annually £4327

Post by **RobertT** » 28 Feb 2018, 16:32

stephen500 wrote:Note section C up rates continue at RPI to a max of 5%, whereas Section B also increase but with no cap.

This relates to how our final salary pension(up to 2008) increases from 2018. Section C will be by RPI upto a max of 5%, while section B will continue to be linked to pay.

stephen500 wrote:Does this mean that for contribution purposes members of both schemes can pay in 6% yet, DBCBS not not enjoy the benefits of the PSE scheme?

As PSE was brought in so the company could save money on National Insurance contributions as well as us, personally I doubt those who join the DBCBS will not get that benefit. Although I don't think it's made clear in the booklet.

Post by **rogersh** » 01 Mar 2018, 16:05

RobertT wrote:
stephen500 wrote:Does this mean that for contribution purposes members of both schemes can pay in 6% yet, DBCBS not not enjoy the benefits of the PSE scheme?
As PSE was brought in so the company could save money on National Insurance contributions as well as us, personally I doubt those who join the DBCBS will not get that benefit. Although I don't think it's made clear in the booklet.

Could you speculate on why PSE cannot be a benefit in the DBCBS or why this has not been made clear?
Would the same situation arise when CDC is introduced.

Post by **stephen500** » 01 Mar 2018, 16:36

rogersh wrote:
RobertT wrote:
stephen500 wrote:Does this mean that for contribution purposes members of both schemes can pay in 6% yet, DBCBS not not enjoy the benefits of the PSE scheme?
As PSE was brought in so the company could save money on National Insurance contributions as well as us, personally I doubt those who join the DBCBS will not get that benefit. Although I don't think it's made clear in the booklet.
Could you speculate on why PSE cannot be a benefit in the DBCBS or why this has not been made clear?
Would the same situation arise when CDC is introduced.

As Robert T says, we cannot be sure PSE will not be used for DBCBS, but in the latest booklet, it does state PSE contributions for one temp scheme and does not mention it for DBCBS.
It may well be available and also may also be used for the new CDC scheme. But there is no mention of it?

Post by **rogersh** » 04 Mar 2018, 08:52

In the booklet (read on myroyalmail) for RMDCP with more than 5 years service the chart on page 4 states DBCBS contributions; Your contribution paid via pse 6% .

Yet that information is omitted from the booklet received (pension review update) & on page 19 of the booklet (also on myroyalmail site) for RMDCP members with less than 5 years service.

Post by **RobertT** » 05 Mar 2018, 16:19

I think the booklets are as usual, very badly written. But as PSE was brought in mainly for RM to save employer NIC’s after contracting out of the state second pension was stopped and the rates for NIC’s were increased. Therefore I see no logical reason why RM would want to stop PSE now.

Post by **rogersh** » 05 Mar 2018, 17:46

Agreed. Stephen500 spotted the discrepancy. It just seems an odd error to make - a saving of around £8.00 in tax & N.I. per week earning 22,500 p.a.

Using that figure I worked out, taking into account LED, That £1.50 more in total contributions would be paid into DBCBS p/w than RMDCP.
Also the deduction of tax N.I. from income would be £1.40 more if in DBCBS than DC including PSE in the calculations.

This is only my estimate (Edit;using my personal tax allowance & supplement) in trying to work out the option to stay in DC or join DBCB. I know other factors need consideration.

Post by **nataddick** » 05 Mar 2018, 18:44

Just reading through this topic thread and yes I agree the omission of PSE under the DBCBS section of the booklet is not helpful !

However, I agree with Robert that, from an employer’s perspective they would certainly want to retain PSE under current legislation, as it significantly lowers the cost of their pension contributions. PSE is now even more important to RM as employers contributions are higher than when they were first introduced, due to the end of contracting out.

There are more general references to PSE on pages 3 & 26.

Personally, I believe that since RMPP members will automatically build up benefits in the new DBCBS scheme by taking no action at all, the option to choose either scheme has no impact on the operation of PSE. The withdrawal of PSE would require some form of advance communication from RM.

Of course, if it remains a concern, then an email to the helpline should resolve the issue.