2018. ?

Post by **nataddick** » 05 Jun 2016, 08:45

My number crunching revealed very similar results to Robert's. In my own case, I am also accruing a pension at the rate of £300 p.a. and I have 3.25 years till NRA 65, from April 2018. So would have expected to gain an extra DB pension of approximately £1000 p.a. at that time.

In a DC scheme using Robert's figures for a combined employee and employer's contribution of 15% or around £3250 p.a. I would have a pension 'pot' worth about £10560, ignoring any growth due to the short time frame involved. Taking no tax free cash, this would provide me with an annuity of £256 p.a. (guaranteed 5 years, inflation proofed and a widow's pension of 50%). Obviously, each individual will have a range of variables and so the impact of the closure to future accrual post March 2018 will be different for each member. As Robert has, I give my own situation as an example of the considerable impact that the proposed changes will have.

It is in recognition of this that I increased the level of my Flexiplan contribution a few months ago, so as to pay as much as I can afford to before March 2018, just in case I am unable to pay into it thereafter.

Hawkey99 · Post by **Hawkey99** » 05 Jun 2016, 10:23

Just wondered are there any timescales on these discussions re Pension changes and AVC changes. Reason for asking is knowing as soon as possible will allow people to pay a lump sum or increase payment to as much as possible before the change start of the new scheme.

I have also increased my AVC slightly just recently.

I assume we will be provided with a new even more complicated pension benefit illustration prior to this happening.

One final thing. I will just be over 55 when these changes come in (assuming April 2018) does this make any difference to anything.??

Thanks

Hawkey.

Post by **RobertT** » 05 Jun 2016, 11:14

Hawkey99 wrote:Just wondered are there any timescales on these discussions re Pension changes and AVC changes. Reason for asking is knowing as soon as possible will allow people to pay a lump sum or increase payment to as much as possible before the change start of the new scheme.

I have also increased my AVC slightly just recently.

I assume we will be provided with a new even more complicated pension benefit illustration prior to this happening.

One final thing. I will just be over 55 when these changes come in (assuming April 2018) does this make any difference to anything.??

Thanks

Hawkey.

I seem to remember that an official announcement was going to be made in June of this year about the proposed closure of the RMPP. Discussions will presumably begin in earnest from then assuming they haven’t already. Confirmation of the actual changes and any concessions the CWU may earn could be anytime up to early 2018 depending on how things go.

I would have thought the annual statements relating to the RMPP would actually be easier to understand post 2018. Because the NRA65 part will just increase with inflation from that date in a similar way to how the NRA60 does now. So you should be able to see how much your pension is worth in plain English. Although this is RM so you never know.

However the ‘new’ DC statements will have the current value and an estimate of value in the future(normally your chosen retirement age) and the amount of pension you may get. But as it’s a DC scheme, there are a number of different options available.
There’s some general info on DC pensions here: https://www.moneyadviceservice.org.uk/e ... on-schemes" onclick="window.open(this.href);return false;

Being over 55 won’t make any difference whatsoever.

Hawkey99 · Post by **Hawkey99** » 05 Jun 2016, 13:17

Thank you Robert. Really appreciate your reply.

Will be looking to put as much into AVC until 2018

GRS · Post by **GRS** » 16 Jun 2016, 18:34

Don't understand why the AVC Flexiplan would be stopped as RM don't pay in to this and it's run by Zurich. Any of you guys know what the reason would be to for RM to be able to stop it.

Post by **RobertT** » 17 Jun 2016, 08:24

GRS wrote:Don't understand why the AVC Flexiplan would be stopped as RM don't pay in to this and it's run by Zurich. Any of you guys know what the reason would be to for RM to be able to stop it.

The main aim of AVC’s is to fund the tax free lump sum and so preserve the maximum monthly pension.

Assuming the RMPP does close in its current form in 2018 it will no longer increase each year, other than by inflation. If AVC’s are allowed to continue however, members will still be able to increase their lump sum entitlements. But because the main scheme benefits aren’t going up, it will have the effect of increasing RM’s liabilities too.
We can put in virtually as much as we want into Flexiplan(up to certain limits), so those liabilities will be an unknown factor to a large degree. And as the aim with everything these days is to cut costs, they probably won’t want to increase them.

It's all conjecture at the moment so we'll have to wait and see what happens.

The fact that RM don’t pay into it and it’s administered by Zurich isn’t really the issue.

GRS · Post by **GRS** » 17 Jun 2016, 17:45

Still don't get that and I can't see that RM can go round shutting down any additinal savings schemes that employees have. Looks to me like another way of driving longer serving people out of the business as I bet that many who have a good few years in are only staying in the job as they have a pension to think about especially if you've been conscientious enough to put extra away. Really does stink the way companies are treating employees pensions nowadays - we are always being told to put money into a pension plan as people don't realise how much they will need when they retire and then companies can just change the conditions of it,shut them down or pilfer from them at the drop of a hat. Can see company pensions being the next mis selling time bomb.

Post by **RobertT** » 17 Jun 2016, 19:20

I think the point is that AVC’s are linked to the RMPP in one way or another. So if the RMPP closes then there’s a chance that the AVC’s might close aswell.

Personally I’ve done the best part of 30 years and the pension is one of the few good things left and I’m not particularly happy about it closing. But the AVC’s I’ve saved over the years mean I’m still in a good position, so the closure won’t affect me as much as some.

I assume we will all be put in the RM Defined Contribution Plan from 2018 and while it’s not as good as the RMPP, there’s nothing stopping you from putting in more than the basic if you want to. I intend to carry on putting in roughly the same amount extra into the RMDCP as I do now into AVC’s.

GRS · Post by **GRS** » 17 Jun 2016, 21:13

Ah that sounds slightly better if you would be able to put extra into the 'new' scheme.I would do the same as you have said and stick the equivalent of my AVC contributions into it.

heapsy · Post by **heapsy** » 18 Jun 2016, 19:43

It doesn't make sense to be able to put more into the pension. Why would RM allow that if it would still cost them more? If the Avcs are stopped then people will need to look elsewhere to boost their pension. I think the main problem will be for those like myself with 20+ years in. When we joined RM the default pension age was 60 and it is very hard to change your mindset and acknowledge that your pension age will be later. Although I only started paying into AVCs late last year, due to a costly divorce some years ago and being very wary about building further rights up, I think it is the best thing in the long term. Fortunately I have a second pension which I have opted to take at 60, so I put more into that if things DO go pear shaped, even though it is more costly to do so.

Post by **RobertT** » 18 Jun 2016, 20:01

The current RMDCP offers various contribution levels which attract differing amounts off Royal Mail, with the highest being:

Employee: 6% - RM: 9%

You can put in more than 6% if you want but it won’t attract anymore contributions off RM. But what you pay in will still benefit from tax relief and PSE.

More info on the current RMDCP can be found here: https://www.zurich.co.uk/internet/works ... 716529.pdf" onclick="window.open(this.href);return false;

GRS · Post by **GRS** » 20 Jun 2016, 18:27

heapsy wrote:It doesn't make sense to be able to put more into the pension. Why would RM allow that if it would still cost them more? If the Avcs are stopped then people will need to look elsewhere to boost their pension. I think the main problem will be for those like myself with 20+ years in. When we joined RM the default pension age was 60 and it is very hard to change your mindset and acknowledge that your pension age will be later. Although I only started paying into AVCs late last year, due to a costly divorce some years ago and being very wary about building further rights up, I think it is the best thing in the long term. Fortunately I have a second pension which I have opted to take at 60, so I put more into that if things DO go pear shaped, even though it is more costly to do so.

As I understand it the new RM pension will be the same one that every employer in the country HAS to offer to employees and you are able to make extra payments in to it so there is nothing RM can do to stop you but their liabilities are only 9% no matter what you put in.

Post by **RobertT** » 20 Jun 2016, 19:33

The ‘new’ RM pension will almost certainly be the same one as has been offered to new starters since 2008, otherwise known as the Royal Mail Defined Contribution Plan.

Under Auto Enrolment rules, employers have to offer a minimum contribution as a percentage of pay, which I think at the moment is only 1%, rising to 3% by April 2019. The RMDCP contribution limits are quite convoluted depending on certain circumstances. But the plan guide will tell you more: https://www.zurich.co.uk/internet/works ... 714073.pdf" onclick="window.open(this.href);return false;

At the moment the maximum RM contribution is 9%, so a lot higher than they have to pay. But it is possible the CWU might be able to negotiate a higher percentage during discussions on the closure of the RMPP.