CWU Letter - Royal Mail Group - Pension Salary Exchange

[TrueBlueTerrier]

Dear Colleague

Royal Mail Group - Pension Salary Exchange (PSE)

Royal Mail has written to staff with details of a new way of making pension contributions, known as Pension
Salary Exchange (PSE), which will save some of the cost of national insurance contributions.


Why is Royal Mail introducing PSE?
The Royal Mail Pension Plan (RMPP) is, like most defined benefit schemes, contracted out of an element of
National Insurance (NI) contributions. The government is ending contracting out in April 2016. This means NI
contributions for RMPP members will increase from 10.6% to 12%. NI costs will also increase for the business.
PSE is a way of reducing some of the cost.

How does PSE work?
Instead of your pension contribution being deducted from your pay, Royal Mail will make your contribution
directly to the pension scheme on your behalf and reduce your headline rate of pay by the same amount. This
reduces the level of pay on which NI contributions must be made and therefore reduces the amount of NI paid.

Does this mean I am getting a pay cut?
No. Your take home pay will increase as a result of PSE because of the reduction in NI contributions. Royal Mail
intend to introduce PSE in August. From then until contracting out ends in April 2016 members of the RMPP will
see an increase in take home pay. After April 2016 the increase in NI from 10.6% to 12% costs will reduce take
home pay for members of the RMPP – but this reduction will be much less than would be the case without PSE.
The Royal Mail Defined Contribution Plan (RMDCP) is not contracted out of any element of NI, so members
already pay the full rate and will not have to pay more NI from April 2016. RMDCP members will see an increase
in take home pay which will be ongoing.

Will PSE affect any pay related allowances or benefits?
No. Future pay rises will be based on pre-exchange pay. Pay related allowances and overtime will also be based
on pre-exchange rates, as will redundancy, Ill Health Retirement terms and death in service payments

Will PSE have any affect on my company pension?
No. Exactly the same level of payment will be made into the scheme, so benefits are unaffected.

Will PSE affect my ability to borrow?
When contacted for details for your earnings, Royal Mail will show your pre-exchange pay as well as your salary
exchange pay. Most defined benefit schemes now operate on a basis of salary exchange so lenders are familiar
with these schemes.

Is this a form of tax avoidance?
No. The scheme will be specifically endorsed by HMRC. Many other defined benefit schemes have operated
salary exchange for many years – the BT scheme covering CWU members in Telecoms is an example.

Is everyone included?
No. Anyone earning less than £192 per week will not be included. This is to ensure no one can lose out on income
related state benefits. If a person’s earnings vary around this level, they will be taken out of PSE for any pay period
in which earnings fall below £192 per week.

Does everyone benefit from salary exchange?
People who have already reached state pension age no longer pay NI and will see no change. Not everyone will
benefit equally. Higher rate tax payers pay a lower rate of NI contribution so people earning above £40,400 a year
will see much less of a saving than basic rate tax payers.

What is the union’s view?
The introduction of PSE was discussed at the Pension Policy Committee –a joint body including Royal Mail and
the unions. We believe it makes sense to introduce PSE, because it reduces the cost of the ending of contracting
out for members of the RMPP and the business, and produces a net financial gain for the members of the RMDCP.
If you have any further questions, the union has established a dedicated email address pse@cwu.org


Yours sincerely


Ray Ellis

[k979aaa]

Looked into this here is some advice http://www.pensionsadvisoryservice.org. ... -sacrifice" onclick="window.open(this.href);return false;

[k979aaa]

Just typed in the opt-out address and it does not work well I never so were all screwed nice bit of PR by royal mail again.

[trythat]

I called HR yesterday morning to request opt-out form and was asked why, also as only got 30 days from when PSE bumpf was put out, I thought I'd get today, but no here yet.

I still class it as a tax avoidance, just because HMRC allow it now, does not mean it may going forward, as some well off people have recently found out.

But each to their own.

[rjack]

The majority of staff in my office have phoned hr for opt out forms, I'm still undecided on what is best, some of us do a collection in the afternoon if our basic wage is lowered would this mean overtime rates will drop as well if not now can you trust them in the future.

[TrueBlueTerrier]

The majority of staff in my office have phoned hr for opt out forms, I'm still undecided on what is best, some of us do a collection in the afternoon if our basic wage is lowered would this mean overtime rates will drop as well if not now can you trust them in the future.

But you can opt in and out (under certain conditions) so if it goes pear shaped opt out.

[trythat]

Got my form today and TBH they could of done it over the phone, as they wanted pay number and address any way. I think they are trying quite hard to encourage people to not opt out, also no return envelope included, filled in and sent back. It will be intresting to see how many people opt out, if they will tell us.

[Eyelevel]

Emailed my request to opt out yesterday to pseopt-out@royalmail.com received opt out form by return today.

[RobertT]

Got my form today and TBH they could of done it over the phone, as they wanted pay number and address any way. I think they are trying quite hard to encourage people to not opt out, also no return envelope included, filled in and sent back. It will be intresting to see how many people opt out, if they will tell us.

The reason PSE is being introduced is to reduce the NI liabilities for RM because from April 2016 NI rates are going up for those in the RMPP. The increased costs will obviously have an effect on the companys finances and will put pressure on other expenses. That could mean the ending of the RMPP as we currently know it and we all get put in a far inferior defined contribution pension or there may be less money on the table for future pay rises, etc.

Ultimately PSE will help the company and it will help its employees too. Why on earth are there so many people determined not to help themselves?

[TrueBlueTerrier]

I do hope that the Opt Outers realize they'll be paying more Nat Ins come April and taking home less pay, for no discernable gain.

I know why people are opting out and its mostly lack of trust towards Royal Mail, whilst understanderable its a little misguided if I may be so bold. Of course some will benefit by opting out, and some are sticking to their principles for political reasons and I have no issues with that. But if you are opting out on a knee jerk reaction I think some may wish they had reseaearched the issue a little more.

[TrueBlueTerrier]

[trythat]

I do hope that the Opt Outers realize they'll be paying more Nat Ins come April and taking home less pay, for no discernable gain.

From what I've I read so far, most people do realise they will pay more NI.

I know why people are opting out and its mostly lack of trust towards Royal Mail, whilst understanderable its a little misguided if I may be so bold. Of course some will benefit by opting out, and some are sticking to their principles for political reasons and I have no issues with that. But if you are opting out on a knee jerk reaction I think some may wish they had reseaearched the issue a little more.

I've read what both RM and CWU have sent me, but TBH not everything is about money, as you say some like me, think differently, for example I'm one of those who don't want overtime or do SA's and take all my rota weeks off, but this will still blow over and what will be, will be. Of course some of the people who opt out my well opt back in the next chance they get.
I'm still happy that I've sent my opt out form back.

[Danelectro]

Got my form today and TBH they could of done it over the phone, as they wanted pay number and address any way. I think they are trying quite hard to encourage people to not opt out, also no return envelope included, filled in and sent back. It will be intresting to see how many people opt out, if they will tell us.

The reason PSE is being introduced is to reduce the NI liabilities for RM because from April 2016 NI rates are going up for those in the RMPP. The increased costs will obviously have an effect on the companys finances and will put pressure on other expenses. That could mean the ending of the RMPP as we currently know it and we all get put in a far inferior defined contribution pension or there may be less money on the table for future pay rises, etc.

Ultimately PSE will help the company and it will help its employees too. Why on earth are there so many people determined not to help themselves?

All your doing is moving problems around and trying to dress up short term gains as some sensible protection of jobs and pay increases when its clear as a bell these sort of changes will not stop the board of Royal Mail pursuing an agenda of job cuts and inferior conditions in the future and at the end of the day the problem with NI is that it disproportionately targets those at the lower end of the pay scale.

We are told that austerity and reducing the deficit are a priority but when it comes to reducing tax revenues for the government by large employers then that's fine and the shortfall can be passed onto the disabled and those receiving in work benefits.

Also pension fund managers played a large role in the junk bonding of industry in the 80s.They typically make their margins not by using our savings in ways that increase employment ,improve working conditions or invest in productive capital formation but in making gains purely by financial means-corporate looting that strips assets to pay dividends and increase short term stock prices.

[cloherty1976]

Got my form today and TBH they could of done it over the phone, as they wanted pay number and address any way. I think they are trying quite hard to encourage people to not opt out, also no return envelope included, filled in and sent back. It will be intresting to see how many people opt out, if they will tell us.

The reason PSE is being introduced is to reduce the NI liabilities for RM because from April 2016 NI rates are going up for those in the RMPP. The increased costs will obviously have an effect on the companys finances and will put pressure on other expenses. That could mean the ending of the RMPP as we currently know it and we all get put in a far inferior defined contribution pension or there may be less money on the table for future pay rises, etc.

Ultimately PSE will help the company and it will help its employees too. Why on earth are there so many people determined not to help themselves?

Although I have opted out and am prepared to pay a little extra I don't think many people will change and will just go with the flow.

[deadbox]

I do hope that the Opt Outers realize they'll be paying more Nat Ins come April and taking home less pay, for no discernable gain.

I know why people are opting out and its mostly lack of trust towards Royal Mail, whilst understanderable its a little misguided if I may be so bold. Of course some will benefit by opting out, and some are sticking to their principles for political reasons and I have no issues with that. But if you are opting out on a knee jerk reaction I think some may wish they had reseaearched the issue a little more.

Of course they realize they'll be paying more NI cont. But at least they will have a FULL N.I. record, so they CAN claim Unemployment benefit when RM reduce the headcount. They also worry about the change of contract that opting in facilitates.

They also remember RM taking a 15 pension holiday !

I find it RICH that unions constantly cry foul upon companies that use "LEGAL" tax avoidance schemes, then ENDORSE them when it suits there own agenda !

Double Standards ?

Personally, I won't miss a couple of pounds a week in exchange for keeping my original contract intact