PENSION - explain it to me simply...

[Blackburn4511]

Trying to step back and see if I understand this correctly:

Today RM pays £400m cash into the DB + DC.
The true expense is higher, but the cash contribution is capped because of a deal made before privatisation.

Starting in 2018, the expense goes to £900m.
The expense has gone up primarily with the move in rates, and is driven by the DB.

So on one hand RM can pay the full £900m, but that is more cash than the company generates in a given year.
On the other hand, RM can ask to close the DB and continue paying £400m, with the workers giving up pension benefits.

Currently RM pays out £200m in dividends to shareholders.

So if the range of outcomes is RM pays £400m, £900m, or somewhere in between.
The company can take on debt (low rates!) or sell real estate to help finance the pension.

My question is simply this: Why would anyone agree to a cut to their pension so that RM can continue to pay a dividend? Many companies do not pay a dividend. Is the share price that important? If it is, why doesn't everyone take a pay CUT so that profits can go up?

The way I view it is that all companies have obligations. To customers, to employees, to suppliers, to shareholders. It seems bizarre that the employees would give up what is owed to them so that the dividend could continue to be paid.

Lastly, I believe that being a part of a union is to protect for things like this. If we wake up in 6 months and the DB is ended, RM continues to pay £400m to the pension so the dividend can get paid, what is the point of the union

[heapsy]

The real issue is that we have lost the battle. Many of our colleagues are already in the new scheme, run by Zurich. With that in mind, how do you think we will defeat RM on this issue when our colleagues wont come out in support? There are talks ongoing. The union is trying to improve on that scheme, so why would they help us if they will end up with a better scheme than when they joined in the first place? Time for people to accept the fact and move on. People will have to make more effort to secure a decent pension for themselves. Sad, but true. It didn't help that we received no help from the managers at the time of the last dispute, but not really a surprise tbh. When the last dispute took place, it emerged that people were not prepared to pay more into the existing scheme, in order to keep it going. If that doesn't tell you where the problem lies then nothing will. Now they are bleating that RMs next attack on the pension isn't fair.

[yellowbelly]

The real issue is that we have lost the battle. Many of our colleagues are already in the new scheme, run by Zurich. With that in mind, how do you think we will defeat RM on this issue when our colleagues wont come out in support? There are talks ongoing. The union is trying to improve on that scheme, so why would they help us if they will end up with a better scheme than when they joined in the first place? Time for people to accept the fact and move on. People will have to make more effort to secure a decent pension for themselves. Sad, but true. It didn't help that we received no help from the managers at the time of the last dispute, but not really a surprise tbh. When the last dispute took place, it emerged that people were not prepared to pay more into the existing scheme, in order to keep it going. If that doesn't tell you where the problem lies then nothing will. Now they are bleating that RMs next attack on the pension isn't fair.

Asking (as a member of the new DC scheme) for a bit of background here so please don't jump down my throat - what action was taken by
members/union to prevent this DC scheme being brought in? Did this action improve upon an initial 'poor' DC scheme that was proposed to get to
todays DC scheme?

Echoing the initial question above how can you expect say a 22 year old who has got bills to pay now, who may not be in the job in 5 years time (today's mobile
workforce) to support industrial action (costing them money in their pocket now or even costing them their job) for a 20/30/40 years or more colleague
who has a much better DB pension in place (albeit the value of which is at risk). It's no good saying "it's to protect your future RM pension" because that person
will probably not be with RM for 5/10/20/30/40 years. There are very few 'jobs for life' any more. What reasons would you put forward to encourage
support from colleagues such as this?

Personally, I'm in a position where I can support action if improved equitable pension proposals for all sections of the workforce are made
but for the reasons above it may be hard to convince those in the circumstances I've described above. One young colleague who joined
within the past two years barely knew he was even contributing to a pension, didn't know how much was being paid by himself
or RM into his pension, what it was invested in or anything. "I got some paperwork but didn't read it" was his answer. I get the
feeling that because todays youngsters see their parents/grandparents getting the state pension that they'll be alright in
50 years time....I think they'll be in for a shock - the political/economic reasons for which are a whole different discussion.

[RobertT]

Asking (as a member of the new DC scheme) for a bit of background here so please don't jump down my throat - what action was taken by
members/union to prevent this DC scheme being brought in? Did this action improve upon an initial 'poor' DC scheme that was proposed to get to
todays DC scheme?

Up to 2008 RM only offered a final salary pension to its employees. But it then decided to close that and replace it with a career average scheme but only for those who were already in the FS scheme at that point. All new entrants from then on were put into a new DC pension. Since the government introduced auto-enrolment in 2012 anyone not in any RM pension scheme was also put into the DC scheme, although there is an option to opt out if you so wish.

There was some consultation about the closure of the FS scheme at the time, but as I remember it, non with regards to the introduction of the DC plan. Although the CWU have negotiated increased contributions since.

Echoing the initial question above how can you expect say a 22 year old who has got bills to pay now, who may not be in the job in 5 years time (today's mobile workforce) to support industrial action (costing them money in their pocket now or even costing them their job) for a 20/30/40 years or more colleague who has a much better DB pension in place (albeit the value of which is at risk). It's no good saying "it's to protect your future RM pension" because that person will probably not be with RM for 5/10/20/30/40 years. There are very few 'jobs for life' any more. What reasons would you put forward to encourage support from colleagues such as this?

I agree that there’s not much incentive for anyone in the DC scheme to partake in IA to support something that doesn’t affect them. Unless perhaps any potential deal also involves an increase in the current DC contributions too.
The money you’re building up in your DC pension now is not lost if you leave RM, you can leave it where it is or transfer it to another pension. It’s still your pension for your retirement.

Personally, I'm in a position where I can support action if improved equitable pension proposals for all sections of the workforce are made
but for the reasons above it may be hard to convince those in the circumstances I've described above. One young colleague who joined
within the past two years barely knew he was even contributing to a pension, didn't know how much was being paid by himself
or RM into his pension, what it was invested in or anything. "I got some paperwork but didn't read it" was his answer. I get the
feeling that because todays youngsters see their parents/grandparents getting the state pension that they'll be alright in
50 years time....I think they'll be in for a shock - the political/economic reasons for which are a whole different discussion.

I don’t think there’s anything unusual about youngsters not taking any notice of their pension – I know people in their 40’s who don’t care one iota about how they’re going to fund their old age, they think it’ll just happen. You only have to read these forums to know how little knowledge our colleagues seem to have. Although I think the annual statements are very poorly done and don’t exactly help matters.

[baldrick]

There was some consultation about the closure of the FS scheme at the time

The 'consultation' was really a sham though. RM had to hold a consultation as it was required by law.
Thousands of pension scheme members responded, not one supported the closure of the scheme, but it still went through. RM was only legally required to 'consult', ie ask for opinions, not to take these into account in any decision.

Unfortunately a lot of people, especially younger ones, don't think too much about what will happen when they reach retirement age. It seems a long way off when you are in your twenties and have more urgent financial needs like housing, and probably raising a family. I didn't think about retirement in my twenties, but the older you get the more you realise how important it is to have financial plans for your old age.

[Tman]

[quote="heapsy how can you expect say a 22 year old who has got bills to pay now, who may not be in the job in 5 years time (today's mobile
workforce) to support industrial action (costing them money in their pocket now or even costing them their job) for a 20/30/40 years or more colleague
who has a much better DB pension in place .

Well, that's the concept of organised labour and trades unionism.
We stick together for the good of all, regardless of how or whether "it doesn't affect me" applies.
If you start picking and choosing which principles to stick to, then you may as well not bother, and if you base it on things like "he's got a better pension than me" then clearly you don't get it.
And social commentators wonder why trade union membership is declining..

[k979aaa]

There was some consultation about the closure of the FS scheme at the time

The 'consultation' was really a sham though. RM had to hold a consultation as it was required by law.
Thousands of pension scheme members responded, not one supported the closure of the scheme, but it still went through. RM was only legally required to 'consult', ie ask for opinions, not to take these into account in any decision.

Unfortunately a lot of people, especially younger ones, don't think too much about what will happen when they reach retirement age. It seems a long way off when you are in your twenties and have more urgent financial needs like housing, and probably raising a family. I didn't think about retirement in my twenties, but the older you get the more you realise how important it is to have financial plans for your old age.

And with that RM is not the proposition it once was this is a hard job with no reward at the end of it lots will go in the next few years as they know the future is grim at best!

[yellowbelly]

Gents,

thanks for your detailed responses.

Well, that's the concept of organised labour and trades unionism.
We stick together for the good of all, regardless of how or whether "it doesn't affect me" applies.
If you start picking and choosing which principles to stick to, then you may as well not bother, and if you base it on things like "he's got a better pension than me" then clearly you don't get it.
And social commentators wonder why trade union membership is declining..

I do 'get it' (with family members who were/are members of NUM, Unite, GMB, ASLEF and NUR), but since the unions were worn down
by Govt policies since the 80's, the question again is how do we convince the youngsters/newer members of the workforce
(mobile workforce, P/T workers etc.) who may never join another union in future employment
to support action (if in fact they are CWU members) that they think they may never see the benefit of?

[Tman]

I meant "you" as in "someone/anyone"" rather than you personally.

[yellowbelly]

I meant "you" as in "someone/anyone"" rather than you personally.

Tman, apologies, my misunderstanding, no offence meant....

[Tman]

None taken...I just worded it badly.

[Dorset Plodder]

Well, that's the concept of organised labour and trades unionism.
We stick together for the good of all, regardless of how or whether "it doesn't affect me" applies.
If you start picking and choosing which principles to stick to, then you may as well not bother, and if you base it on things like "he's got a better pension than me" then clearly you don't get it.
And social commentators wonder why trade union membership is declining..

I feel your Frustration T-Man I may just be Stroppy Bastard who doesn't mind an argument but I cannot understand how SELFISH, SHORT-SIGHTED & GREEDY most of my colleagues are! They'd sell their Mother for a £200 quick fix and sign away their hard won T&Cs.

God knows what you've got to do to motivate these drones to actually stand up for a principle. Whenever a Topic comes up in WTLL it quickly boils down to the "I'm alright f**k You Jack" type solution.

Could you ever imagine these Jelly Fish ever standing up for themselves, let alone their workmates? It's all, "I've got to pick the kids up"!....."I've got to get home to walk the Dog"!....... "I don't bother with a Meal Break I just like to keep going"! FFS We're just pissing in the wind trying to motivate these people!