Post Office proposes maximum contribution of 11% in new DC scheme

[TrueBlueTerrier]

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The Post Office has said it will pay a maximum of 11 per cent as its employer contribution for its proposed new defined contribution scheme, it has said.

The Post Office hopes to move all its employees in its DB Royal Mail Pension Plan and its current DC Post Office Pension Plan into the new improved DC pension scheme, from 1 September 2016.

The minimum contribution from the employee for the new scheme will be 3 per cent, which the Post Office will contribute 7 per cent making ten per cent in total. For each percentage point extra that the employee puts in, the Post Office will put in an extra percentage too, up to the limit of 11 per cent.

The company is currently in a 60 day consultation with employees on the proposal to close the Royal Mail Pension Plan, as it said it can no longer afford the costs for the long-term.

The company’s annual report for 2014/15 reported that the pension scheme had a surplus of £135m as at 1 April 2012. However, the spokesperson said the Post Office will find out the scheme’s financial position as at 31 December 2015, by next week.

“Due to long term affordability and protection concerns both public and private sector pensions schemes are changing their pension arrangements. We are faced with the same difficult decision and we simply believe we cannot afford these costs for the long term. Therefore our imperative is to take the necessary steps to protect the benefits that members have already built up, so that the DB plan will pay out in the future,” a Post Office spokesperson said.

However, union CWU said the closure of the scheme is an attack on “members’ rights”. CWU assistant secretary Andy Furley said the Post Office has “rushed” into the consultation without any “meaningful dialogue with the CWU and without allowing any opportunity for alternatives to be explored”.


“The scheme is in surplus – not in deficit. So not only is this all extremely unfair – there is no financial case for the changes either,” he stated. The union said it is not opposed to any change but it believes there is no need to close the scheme until late 2022.

[mark.cup]

I assume they want to pocket the surplus i.e. Members money?