What are likely changes going to be to our pension

thegreatestfreddy · Post by **thegreatestfreddy** » 27 Jun 2016, 20:28

Just wondered if anyone has got a flavour for how our current pension (RMPP payable ay 65) is likely to change or will it simply be closed... In which case we will be left with the DC (Zurich) scheme which looks absolutely dire I think??

Post by **RobertT** » 28 Jun 2016, 14:21

The RMPP is expected to close altogether with our NRA65 benefits accrued up to 2018 ring fenced and only going up with inflation from then on.

The alternative offering is going to be the RM Defined Contributions Plan administered by Zurich. It's possible the CWU might be able to persuade RM to increase their contributions into the RMDCP but at the moment the max employee payment is 6% with RM putting in 9%.
Full details of the RMDCP can be found here: https://www.zurich.co.uk/internet/works ... 716529.pdf" onclick="window.open(this.href);return false;

srfkdr · Post by **srfkdr** » 28 Jun 2016, 15:37

In my case I would reach 60 in December 2018, but it seems that I would have to draw both my NRA60 and 65 pensions from March 2018 since any increase from RPI would not pay back the income lost between March and December. Am I correct?

Also, would I still be able to start paying into the new Zurich Plan in March or would I be barred?

Post by **RobertT** » 28 Jun 2016, 16:26

srfkdr wrote:In my case I would reach 60 in December 2018, but it seems that I would have to draw both my NRA60 and 65 pensions from March 2018 since any increase from RPI would not pay back the income lost between March and December. Am I correct?

You will lose about 8 months worth of pension compared to what you would have got had the scheme stayed open until your 60th in December 2018. However if you take your NRA60 pension 8 months early you'll lose about 3% of its value, while your NRA65 pension would be reduced by about 28% because you’re taking it 5 years 8 months early.
How the maths of RPI,etc works out will depend on individual circumstances.

Also, would I still be able to start paying into the new Zurich Plan in March or would I be barred?

As long as you’re employed by RM I don’t see why you wouldn’t be able to pay into the RMDCP when the RMPP closes.

thegreatestfreddy · Post by **thegreatestfreddy** » 29 Jun 2016, 06:15

I didn't think it was definate that the RMPP will close in 2018?? Will RM simply ask us to increase our personal contributions in order to keep the scheme open?? ... This seems to have happened in many organisations as far as I know

Post by **RobertT** » 29 Jun 2016, 14:45

thegreatestfreddy wrote:I didn't think it was definate that the RMPP will close in 2018?? Will RM simply ask us to increase our personal contributions in order to keep the scheme open?? ... This seems to have happened in many organisations as far as I know

There is nothing written in stone yet about what will happen but it looks increasingly likely that it will close.
The union will probably argue that increasing contributions and/or normal retirement age for pension accrued after 31st March 2018 is a way of keeping it open as mentioned in this LTB: http://www.royalmailchat.co.uk/communit ... 27&t=73467" onclick="window.open(this.href);return false; and you are right to say that some schemes have done this. But lots of others have closed their defined benefit pensions and replaced them with inferior defined contribution schemes too.

Personally I’m fully expecting it to close.

Post by **nataddick** » 29 Jun 2016, 21:58

An increase in personal contributions was one of a number of options considered by RM in 2013, before the last pension proposal was steam rollered through with minimal objections. Other options included increasing the retirement age or reducing future benefits and these were all ruled out.

In 2013, the changes that were made were relatively minor compared to what is now being planned as the objective then was simply to keep the Plan open but to secure a reduction in the cost of funding.

The new proposal, undoubtedly known to RM, but not yet shared with CWU or plan members will definitely go ahead despite protestations, at the latest by March 2018. I personally now think it will be closed sometime in 2017.

thegreatestfreddy · Post by **thegreatestfreddy** » 30 Jun 2016, 06:22

How does the RMDCP plan stack up £ for £ compared to the RMPP plan..

What are our current % contributions and RM % contributions into RMPP...

I did try looking at the Zurich site but did not understand at all how to use their 'calculator' and what it returned as a result was bleak.... !

I think I entered £20/week (at age 55) for 10 years and it projected (middle of optimistic and pessimistic) about £400 pa pension (at 65) ?? Meaning you would have to draw for about 25 years to get your money back ??

Post by **RobertT** » 30 Jun 2016, 13:11

Employees currently pay 6% of pensionable pay while RM pay 17.1% into the RMPP. According to RM their contributions will need to increase to over 40% in order to keep the scheme open.

The current plan is Defined Benefit so the pension you get is determined by how much you earn(basic) and your length of service. However with the RMDCP you just build up a pot of money, which you can do a number of things with when it comes to taking it:

1. Buy annuity(an income for life)
2. Take it all out as cash with the first 25% being tax free
3. Draw it down over a period of time.

The important thing with these online calculators is to put in the employer contributions aswell. To get the current maximum 9% RM contribution you have to put in 6% yourself. So if your £20 equates to 6% you’ll be getting another £30 per week of RM too.

It is possible to put in more than 6% but you won’t get anymore off RM.

chuckychucks · Post by **chuckychucks** » 09 Jul 2016, 16:19

So if the plan is likely to close and Royal Mail are currently paying 17.1% but would have to pay 40% to keep the scheme open why don't they just do the decent thing and keep their contribution at 17.1% instead of drastically cutting it to 9% ..it's like we are getting kicked in the balls twice..ouch!! or am i just simplistic in my thinking

Personally i feel that they should contribute 20% to the Zurich policy if they plan to close ..it's the decent thing to do for their hard working employees all things considered and they are still getting out lightly.

Post by **RobertT** » 09 Jul 2016, 17:14

The 9% is the maximum RM currently pay into the RMDCP but I’m sure the CWU will try and negotiate a higher percentage for when the RMPP closes.

We are now a privatised company where the aim is to make money. So realistically RM will want to offer a decent amount to make the pension competitive, which at 6% employee - 9% RM makes it comparable with other companies, while also keeping their own finances in check.

I think you’re dreaming a bit with your suggestion of 20%, although personally I would like to see another level of contributions introduced of something like 8% employee – 12% RM.

heapsy · Post by **heapsy** » 11 Jul 2016, 20:00

With regard to contributions, does the LEL still apply to those people who joined from 1st April 2008? I'm a section C member and am wondering if that still applies in the event of us being moved to the Zurich scheme in future. Many thanks in advance.

Post by **RobertT** » 12 Jul 2016, 05:34

heapsy wrote:With regard to contributions, does the LEL still apply to those people who joined from 1st April 2008? I'm a section C member and am wondering if that still applies in the event of us being moved to the Zurich scheme in future. Many thanks in advance.

The LEL or sometimes called the LED, is only applied to people who are in Section C of the RMPP. I believe the plan when the RMPP closes is to do away with it altogether. That would have the effect of Section C members paying more per week, assuming a continued 6% contribution rate.