Royal Mail’s CDC plan delivers 6.4pc uplift in pensions

[POSTMAN]

https://corporate-adviser.com/royal-mai ... -pensions/

Royal Mail’s new CDC plan delivered a above inflation pension increase of 6.4 per cent (CPI + 2.6 percentage points) for over 100,000 postal workers in its first year.

Pension consultants say this is a good result for the scheme which has set out to deliver real-term pension increases for members.

These increases come on the back of strong market returns particularly in growth assets. Royal Mail is the first employer to offer a CDC scheme, which wraps around both the accumulation and decumulation stage.

CDC schemes do not offer a guaranteed salary-related income in retirement like a DB scheme, but by pooling risk, particularly in relation to mortality, they aim to deliver higher returns for members than DC scheme. CDC also offer a more simplified approach for members when it comes to to turning accumulated savings into a regular income at retirement, however they involve more complex actuarial assumptions for scheme managers.

The Pensions Schemes Bill is pacing the way for multi-employer CDC schemes with the government consulting on the introduction of retirement-only CDC options.

LCP partner Helen Draper says: “For the scheme’s members and their representative union, this is a great result and shows members have really benefitted from the innovative new scheme design and strong investment returns delivered during the year.”

LCP partner Steven Taylor adds: “Other large organisations have been closely monitoring Royal Mail’s early years’ experience with CDC. We expect these results will now encourage others to progress their CDC plans over the upcoming period.”

[RobertT]

Terry Pullinger seems pleased with how it's going so far.....

https://www.facebook.com/TerryPullinger ... Qf3AaMQAJl

Post

[Flashman_]

Well thats not that good considering the average market increase last year was around 13%. Most did far better, The s&P did 17.9%
This year they will struggle to reach anywhere near that with Trumps wars and 3AM fever dream ideas.

[RobertT]

The increases will never mirror what stock markets do, because of the way the scheme works.
For more info on how they come to their annual valuations, see here: https://rmcollectiveplan.com/documents-forms

[Jaggs]

Well thats not that good considering the average market increase last year was around 13%. Most did far better, The s&P did 17.9%
This year they will struggle to reach anywhere near that with Trumps wars and 3AM fever dream ideas.

It will never increase by what the market does as the trustee will look at what a long term sustainable increase is. If you got the whole increase of the market one year would you be happy to accept a 20% cut in the income section of the pension if the markets were to fall by that much.