Can i Stay in DC Scheme?

itinerant · Post by **itinerant** » 11 Mar 2018, 05:32

Hi, quick question as I have not found the definitive answer on this.

I am a newbie (4 months) so am on the DC pension scheme (1% employer and employee contribution as in 1st year and then due to increase).

I am not keen on the new CDC scheme as I have other pensions, will probably only be at RM for up to 10 years max (getting out before 60) and prefer the flexibility of a DC scheme in line with other pension/savings arrangements I have.

I see mention that the CDC scheme is going to apply to all members so am unsure if that means they will be closing all other schemes or not. My question is, will I be automatically transferred over to this new CDC scheme if it gets the go ahead or will I remain in the DC scheme and have to actively opt into CDC if I wanted to join it (which would then allow me to stay in the DC scheme assuming it is still running)?

gary1975 · Post by **gary1975** » 11 Mar 2018, 07:18

What it says on the tin one pension for all, unless this cdc scheme gets back heeled, then who knows it's all a bit if when or maybe

fishtank · Post by **fishtank** » 11 Mar 2018, 08:38

There is no definitive answer anywhere.
They are giving members of the RMPP the option of joining a scheme and giving RMDC members the option of leaving a scheme while withholding vital information on the future of that scheme. It seems to me to be legally dangerous at best. Giving "clues" and possibilities won't protect them, information like this has to be communicated explicitly.

I would suggest all members of the DC and RMPP schemes contact both Royal Mail and Zurich asking for clarification. It's a simple question that deserves a simple answer.

clashcityrocker · Post by **clashcityrocker** » 11 Mar 2018, 08:51

According to my rep this question was asked at the roadshow he attended.
He said nobody at the top table (union/pension experts) could understand why anybody would opt to stay in the DC scheme.
No definitive answer was forthcoming.

Post by **RobertT** » 11 Mar 2018, 08:59

In their booklets, the RM say of the CDC scheme:

This would provide one scheme for all RM employees.

While the CWU say in their booklet:

We have jointly agreed to introduce one wage in retirement pension scheme for all CWU represented grades in the RMG to replace the current DB and DC schemes.

That suggests to me that the RMDCP will close when the CDC scheme is introduced, and that RM and the CWU have decided that CDC is best for everyone. But until we’re actually told, we can only really guess what might happen.

RM have to by law, offer their employees a pension and pay a minimum amount into it. Ultimately it’s up to them what type of scheme that is. There doesn’t have to be more than one option!

However, if the RMDCP does stay open, my guess is that you would be automatically transferred over to the CDC, unless you opt to remain in the RMDCP.

fishtank · Post by **fishtank** » 11 Mar 2018, 09:47

If you were cynical you would say that they were trying to get as many as possible out of the DC scheme before officially announcing its future and triggering a consultation. It's easier to consult with/ignore a few thousand members than 40 thousand. If you were really cynical you would say the union is complicit in this "misinformation".

I might join the DC scheme purely to be part of the class action circa 2025.

A piece of advice, keep all paperwork, you never know when your lawyer might need it.

itinerant · Post by **itinerant** » 11 Mar 2018, 09:55

clashcityrocker wrote:According to my rep this question was asked at the roadshow he attended.
He said nobody at the top table (union/pension experts) could understand why anybody would opt to stay in the DC scheme.
No definitive answer was forthcoming.

Thanks for all the feedback guys. I think there are some advantages of a DC scheme depending on your circumstances (I have just joined RM in my late forties and dont think I will be here for more than 10 years so for me I prefer the flexibility of investment and drawdown options).

Post by **Aquarius** » 11 Mar 2018, 12:47

It really is staggering that with just a few weeks to go before the RMPP ends - and we don't even know the answers to questions like this.

We are being asked to make a major financial decision and being rushed into this without knowing the full facts.

I think whatever scheme you are in - if/when the CDC scheme starts - the RMDCP will end.

The union are desperate for everyone in one scheme

For what it's worth i cannot decide right now between DBCBS or joining the RMDCP plan

Post by **rogersh** » 11 Mar 2018, 15:29

As the pension review update states. "Assuming the necessary regulatory and legislative changes are made, the intention is that once the new arrangements are set up, members from RMPP and RMDCP would automatically join the CDC scheme."

So the DBCB transition scheme will also close in the future which could be sooner than later or never depending on the outcome. "CDC scheme to be introduced as soon as possible" could mean that CDC is set up in a year to 18 months??.

fishtank · Post by **fishtank** » 11 Mar 2018, 15:38

rogersh wrote:As the pension review update states. "Assuming the necessary regulatory and legislative changes are made, the intention is that once the new arrangements are set up, members from RMPP and RMDCP would automatically join the CDC scheme.".

None of that helps unfortunately. It's all supposition, the intention might be that members transfer automatically but it doesn't mean that there won't be an opt out or that the RMDCP will definitely close. It also states that after April all members of the RMPP will automatically transfer into the DBCBS but we now know that isn't true. There is an opt out of that into the RMDCP.

Schiff · Post by **Schiff** » 11 Mar 2018, 16:24

My reading of everything said leads me to believe that the DC scheme will be closed if/when the new CDC scheme come into existence.

Those of us who want the flexibility of a DC scheme will, shortly before retirement, have to transfer the value of our 'share' of the CDC pot into an individual SIPP in order to take the benefits flexibly. I suspect that this will be discouraged as it weakens the collective pot.

posted · Post by **posted** » 11 Mar 2018, 22:11

I've specifically asked the question.

There s no intention to keep the DC or DBCBS scheme running alongside CDC.

Once the CDC scheme comes into effect (depending on any qualifying eligibility criteria) all will be moved to CDC scheme.

remember, in order to pool assets, smooth out gains and reduce administrative savings, they would need a lot of people to take part. Hence make it the only scheme available