Royal Mail Union Threatens Strike to Protect Pension Plan

[baldrick]

If George Osborne hadn't taken the £29bn in the RM pension fund, and RM hadn't taken a contribution holiday when the fund was in surplus, there would be enough to fund staff pensions. They can't now do a Sir Phillip Green and wash their hands of any responsibility. pensions are deferred wages, if they were part of the employment contract they should be honoured. It's the same as RM saying to staff they want a lump of their past wages back.

There was a time when pensions weren’t allowed to have a surplus, the problem really was that RM took a longer holiday than they should have done.

George Osbourne and the taxpayer took on £29Billion of RM pension fund assets plus another £10Billion worth of unfunded liabilities. If that hadn’t happened the RMPP would have closed sooner.

There would only have been £10bn of 'unfunded liabilities' if every RM employee had taken their pension at that time, together.

[RobertT]

..the number of workers per retiree is already 3.3 and is expected to reduce to 2.9 by 2050, then it's obviously going to be harder for the nation to afford it.

Not necessarily, no. In fact, far from it. It all depends on how much wealth those 2.9 people are producing in 2050. My contention is that they will be producing more than enough to fund a decent retirement for the elderly population at that time. In fact, they will be producing more than did the 3.3 people that are today carrying the burden. A lot more.
And, to be fair, this isn't just my contention, it is backed up by the facts I've quoted above with regards GDP per capita over time.

But those facts are based what has happened in the past like my workers per retiree facts are. What happens in the future can only ever be projections.

And what about Brexit? There’s a huge question mark over what it will mean for this country. Many UK companies are already beginning to find their margins tightening due to changes in exchange rates, etc and we haven’t even left the EU yet. If that continues that ultimately means less profits, less corporation tax being paid and an increased possibility of job losses. And in turn less income tax/NI coming into the treasury and more state benefits going out, and so putting more pressure on the nations finances.

In my opinion the out vote has got the potential to be either the making or the breaking of this country. In the short to medium term at least that may well put pressure on the national income and those GDP per person figures may well reduce accordingly. Whether that continues for the longer term, only time will tell.

[RobertT]

If George Osborne hadn't taken the £29bn in the RM pension fund, and RM hadn't taken a contribution holiday when the fund was in surplus, there would be enough to fund staff pensions. They can't now do a Sir Phillip Green and wash their hands of any responsibility. pensions are deferred wages, if they were part of the employment contract they should be honoured. It's the same as RM saying to staff they want a lump of their past wages back.

There was a time when pensions weren’t allowed to have a surplus, the problem really was that RM took a longer holiday than they should have done.

George Osbourne and the taxpayer took on £29Billion of RM pension fund assets plus another £10Billion worth of unfunded liabilities. If that hadn’t happened the RMPP would have closed sooner.

There would only have been £10bn of 'unfunded liabilities' if every RM employee had taken their pension at that time, together.

The government/taxpayer took on the entire liabilities of the RMPP up to April 2012 as part of the privatisation process . That was in the region of £39 Billion, however there was only about £29 Billion in the ‘pot’, therefore there was a £10 Billion deficit. Whether everyone takes their pension at the same time is irrelevant.

If the government hadn’t of done what they did that deficit would have almost certainly grown even more, as other companies have experienced.

Royal Mail are either unable or unwilling(depending on your point of view) to fund the pension scheme past 2018. How do you think they would cope with a huge deficit aswell? So while many of us will always disagree with the privatisation of the Royal Mail, it actually made the pensions that we’ve already built up far more secure.

[fishtank]

No matter where you stand on the sustainability of the DB pension or whether you're even part of it there is a need to fight this issue.

Ofcom are pressuring the business to reduce labour costs and drive up efficiency, shareholders are pressuring the business to maximise dividends, this is in my opinion the beginning of an attack on all our terms and conditions, a "soft target" test of the unions's resolve, if we give in without a fight they will grow in confidence and come back for more. Sometimes you can lose a battle and still make your enemy wish they hadn't started the fight. That's our only options, lie down meekly or go down kicking and screaming.

[RobertT]

This thread has gone off track but I don’t think anybody is denying that we need to fight for the pension scheme, it’s just that people have differing opinions as to whether we will win.

The union has my support!

[nataddick]

I agree that we should fight the pensions issue but in doing so there has to be a sense of realism as to the likely outcome.The starting position has to be one of no change.However, I fully expect us to end up with an improved RMDC scheme that requires RM to continue to contribute the same 'regular'contribution rate of 17.1% that it currently pays into the RMPP.Even that would be an achievement as RM would no doubt like to cap it's liability with a maximum contribution rate of 9% per member.

[jetblack]

If the company scheme goes the way some are forecasting (ie. To the RMDC) then I for one think that it only be right that I should be able to invest my future pot/accruals in any way I see fit. My risk, my choice. And I'm not talking about the pitiful choice the AVC's currently offer. What's the current investment choices for the defined contribution scheme, anyone know ?
In this day and age there is no excuse for members not being able to access and invest in everything from world stock markets to forex trading to PM's etc. It's all easily doable. And to be honest, if they are asking me to take all the risk it surely can't legitimately be argued that I should accept some sort of limited/demarcated investment choices as with the current AVC setup.

Not that I think it should go this way. I personally don't think, either, that it's good strategy to fight for the status quo - I think the union should take the bull by the horns and try to bring the current DC members up to the DB members level.

As I say, the U.K. Is producing more wealth year on year - not less.

Before long (and this isn't part of the current political discourse, but it is fact nonetheless) the (UK and RM) workforce will be cut by half. Thanks to technological advance.
But the nation won't be poorer cos there's fewer in work - it will in fact be richer.

There are myriad complex means by which we are being separated from that which is rightfully ours. The current pensions "crisis" is a classic example.

[nataddick]

I agree that we should have a much wider choice of funds that are available to invest in the 'new' RMDCP akin to those offered by SIPP's available on the open market. RM may not be prepared to go that far, or relinquish responsibility, for the direction of their employer contributions and to some extent, I can understand that. So, I will put my view out here. The employer's contribution may have a restricted choice of funds (as a safeguard for them) or a default option (also as a safeguard for them) and the employee's contribution may have a wider choice of options on their own contributions 'a la' SIPP with complete freedom of choice.

These are typical of the issues I would like the CWU to be campaigning on behind the scenes as an objective (without admitting defeat upfront !) The death in service benefit needs to be raised from 4 times pensionable pay to around 8-10 times in recognition of the loss of the widow/widowers/civil partner's pension that would result from a transfer from the RMPP to the revised RMDCP.

No one knows the outcome of the latest triennial actuarial valuation and very few people on 'our' side of the argument have the knowledge to challenge any assumptions that are made. Ultimately, we need to rely on the CWU and theirs advisers at First Actuarial to challenge issues on our behalf. However, notwithstanding the representations made by the CWU and it's professional advisers about the closure of the PO pension scheme closure and the consultation by RM, it seems as though it will go ahead as planned.

[RobertT]

I understand the calls for increased investment choice, and I agree that the current AVC offerings are poor. But is a SIPP really suitable for the majority of posties, or indeed the majority of pension savers in general?

They are only really aimed at the serious investor who knows what they are doing, which in practice many people don’t. Their charges tend to be higher than ‘in house’ funds, which considering the relatively low contributions many make, will eat into their savings more. And with thousands of different places to put your money they are a bit of a minefield at the best of times.
So in my opinion the take up rate of a ‘Royal Mail SIPP’ would be very low and so would not be a viable option for the trustees to offer.

Anybody who doesn’t know what a SIPP is, there’s a good easy to understand guide here: http://www.moneysavingexpert.com/savings/cheap-sipps" onclick="window.open(this.href);return false;

Perhaps a ‘DIY Pension’ similar to what Standard Life offers might be a better option, which offers a choice of over 280 funds. Although, again personally I think that’s a lot for people who don’t know what they’re doing. Info: https://www.standardlife.co.uk/c1/accou ... tures.page" onclick="window.open(this.href);return false;

As for the investment choice currently offered by the RMDCP, there’s 11 funds to choose from. Details here: https://www.zurich.co.uk/internet/works ... 128011.pdf" onclick="window.open(this.href);return false;

[Blackburn4511]

the number of people simply laying down and accepting change is staggering.

Whatever the number that RM needs to come up with to keep scheme open is, say £500m, the fact of the matter is that RM still pays >£200m dividend. Further, RM balance sheet has very modest debt levels, especially compared to other peers in Europe. (one only has to look at previous posts on this thread to get an opinion of interest rate on any debt).

To imagine a scenario where pension is closed and dividend continues seems absurd, yet many here seem to be accepting it. if that happens have to wonder what the point of the union even is...

[cloherty1976]

the number of people simply laying down and accepting change is staggering.

Whatever the number that RM needs to come up with to keep scheme open is, say £500m, the fact of the matter is that RM still pays >£200m dividend. Further, RM balance sheet has very modest debt levels, especially compared to other peers in Europe. (one only has to look at previous posts on this thread to get an opinion of interest rate on any debt).

To imagine a scenario where pension is closed and dividend continues seems absurd, yet many here seem to be accepting it. if that happens have to wonder what the point of the union even is...

Surely if they don't pay the £200 million in dividends the share price would drop very quickly which would also hurt us posties?

[TrueBlueTerrier]

the number of people simply laying down and accepting change is staggering.

Whatever the number that RM needs to come up with to keep scheme open is, say £500m, the fact of the matter is that RM still pays >£200m dividend. Further, RM balance sheet has very modest debt levels, especially compared to other peers in Europe. (one only has to look at previous posts on this thread to get an opinion of interest rate on any debt).

To imagine a scenario where pension is closed and dividend continues seems absurd, yet many here seem to be accepting it. if that happens have to wonder what the point of the union even is...

Surely if they don't pay the £200 million in dividends the share price would drop very quickly which would also hurt us posties?

£100 a year on average on dividends - against £1000s in pension pay outs. I know which I would rather surrender.

[cloherty1976]

the number of people simply laying down and accepting change is staggering.

Whatever the number that RM needs to come up with to keep scheme open is, say £500m, the fact of the matter is that RM still pays >£200m dividend. Further, RM balance sheet has very modest debt levels, especially compared to other peers in Europe. (one only has to look at previous posts on this thread to get an opinion of interest rate on any debt).

To imagine a scenario where pension is closed and dividend continues seems absurd, yet many here seem to be accepting it. if that happens have to wonder what the point of the union even is...

Surely if they don't pay the £200 million in dividends the share price would drop very quickly which would also hurt us posties?

£100 a year on average on dividends - against £1000s in pension pay outs. I know which I would rather surrender.

Not talking about the dividends just the price. Some of the people on here might be selling very shortly. Then you have the investment not going into the company which may costs jobs and more importantly your pensions

[milly]

the number of people simply laying down and accepting change is staggering.

Whatever the number that RM needs to come up with to keep scheme open is, say £500m, the fact of the matter is that RM still pays >£200m dividend. Further, RM balance sheet has very modest debt levels, especially compared to other peers in Europe. (one only has to look at previous posts on this thread to get an opinion of interest rate on any debt).

To imagine a scenario where pension is closed and dividend continues seems absurd, yet many here seem to be accepting it. if that happens have to wonder what the point of the union even is...

If the dividend were to stop and it was used to shore up the pension there would be a huge drop in the share price that would cost small and large investors thousands of pounds and it would affect many other Pension schemes that own Royal Mail shares.
What if other companies like BT were to do the same to keep their Pension afloat.
Investors would then look to sell shares in any company that had a big Pension deficit.
We would be looking at a massive drop in the FTSE which in turn would destroy millions of UK pensions including ours.

[jetblack]

This is what I was trying to drive at earlier in this thread.

"The former Conservative pensions minister, Ros Altmann, has launched an extraordinary attack on the Bank of England for making pensions ruinously expensive for employers............QE, where the Bank of England creates money to buy government bonds, has the effect of pushing down the interest rate, or yield on government bonds. It means lower mortgage rates, and lower interest rates on bank deposits. But it also spells hardship for final-salary-based pension funds, as lower interest rates mean investments will not grow as much to meet the bill for paying future pensioners. So employers have to pay more in now to fill the gap..........Royal Mail is typical of companies in the private sector with expensive final-salary-style pension schemes. It faces a battle with its 140,000 workers over plans to slash its employer contribution from 45% of salary to 12%, claiming the cost was “simply unaffordable”."

Altmann said: “Taxpayers fund the enormous employer contributions which have been required to overcome the Bank of England pension scheme deficit, while Bank of England employees do not contribute at all. This may help explain why the Bank of England seems so complacent about the pension problems created by its policies. However, the problems are real for most employers and may undermine the effectiveness of QE itself. These side-effects need to be taken more seriously.”

First time I've agreed with a Tory on anything in a long long time
(OK - ever)

None of this is our fault - and it is not inevitable.