The Pension Solution.

[Lincox]

Fish, I do not think that Royal Mail can legally transfer the assets of the current DB Scheme in to a new DC/DB scheme. The rights of the current DB scheme pay for pensions already in payment which they are legally bound to pay and the accrued rights of contributing members are also a legal right. The underlying assets should at least match current and future pay outs. Fortunately the current scheme is in surplus whereas it is common for pension funds to be in arrears.
I can only envisage that any new scheme would need to be completely separate as are previous Royal Mail schemes although some were sold out to the government when Royal Mail was privatised. I think this new scheme is going to be similar to the old endowment type pensions whereby you have a guaranteed minimum pension and then subject to investment returns an annual bonus will be added usually based on a percentage of the annual profit/loss.
Strangely enough I bought one of these back in the seventies. It had a 12% guaranteed annuity and so when I took the benefits at age 60 it became a fantastic return. No chance of getting anything like that now though.

[fishtank]

I think the only important fact will be what will Royal Mail's minimum guaranteed pension level look like.

Forget might be and could be if the investments go well, what will be the bottom line guaranteed "wage in retirement" if the investments perform poorly.

Until I get a better idea of what that might be I won't be voting to move my pension anywhere, transition period or otherwise.

[LouBarlow]

I'm not voting 'yes' for *any* pension proposal that relies on government legislation for it to come into effect. It just leaves us all in limbo potentially for years to come.

[nataddick]

The CWU seems intent on sacrificing the rights of the existing RMPP members in an attempt to provide a united pension solution for all. I will be voting ‘No’ to the latest ‘flawed’ proposal from the CWU and RM. It is pie in the sky, wishful thinking and it will cost the CWU, in terms of future membership support on pensions. We do not currently have a one pension solution for all and it is not needed. We all started from different positions and so it is a legacy of CWU membership that has resulted in the current dilemma.

[nataddick]

Dingo - thanks for your view which, as always, is most welcome.

The surplus in the existing RMPP arose out of the contributions made by both RM employee and employer contributions and, as such, confers no rights whatsoever to RMDC members, so why the ‘now’ concern for the latter ?

Transitional Arrangements - Have the CWU and/or it’s financial advisors read the latest half year RM Financial Report & Accounts and, in particular, their intended use of the RMPP’s surplus, post 31 March 2018 which gives RM (not the membership) the legal right to a refund in the future. By keeping the existing RMPP open post April 2018, this would provide Royal Mail with the crucial financial incentive to secure a speedy resolution, rather than drag it out, with only the possible hope of the current Government passing the necessary legislation.

I am furious that the CWU appears to be selling existing RMPP members short, since they comprise around 2/3rds of the CWU membership and are really being taken for granted. I applaud the CWU for trying to use the skeleton framework of the Pensions Act 2015 to progress the interests of members with the WINR’S scheme but even Henry Tapper agrees, the CWU have strayed from their original proposal and this should not be to the detriment of the majority of CWU RMPP members.

[jetblack]

I think the only important fact will be what will Royal Mail's minimum guaranteed pension level look like.

Forget might be and could be if the investments go well, what will be the bottom line guaranteed "wage in retirement" if the investments perform poorly.

Until I get a better idea of what that might be I won't be voting to move my pension anywhere, transition period or otherwise.

I'm with you Fish - thats the position we've been in for at least the last 18 months, with no light being viewed at the end of the tunnel.

Little word of caution for everyone also, going forward - almost all asset classes are currently overvalued. Just sayin.

[claretandblue]

Dingo - thanks for your view which, as always, is most welcome.

The surplus in the existing RMPP arose out of the contributions made by both RM employee and employer contributions and, as such, confers no rights whatsoever to RMDC members, so why the ‘now’ concern for the latter ?

Transitional Arrangements - Have the CWU and/or it’s financial advisors read the latest half year RM Financial Report & Accounts and, in particular, their intended use of the RMPP’s surplus, post 31 March 2018 which gives RM (not the membership) the legal right to a refund in the future. By keeping the existing RMPP open post April 2018, this would provide Royal Mail with the crucial financial incentive to secure a speedy resolution, rather than drag it out, with only the possible hope of the current Government passing the necessary legislation.

I am furious that the CWU appears to be selling existing RMPP members short, since they comprise around 2/3rds of the CWU membership and are really being taken for granted. I applaud the CWU for trying to use the skeleton framework of the Pensions Act 2015 to progress the interests of members with the WINR’S scheme but even Henry Tapper agrees, the CWU have strayed from their original proposal and this should not be to the detriment of the majority of CWU RMPP members.

I agree with this, our surplus shouldn't be used to subsidise a new scheme, the RMPP should stay open until the surplus has gone, then there maybe no need for a transisitional scheme.

[stephen500]

This is getting too complicated, even for me.
I have a real concern. If we stay in the DB scheme as currently constructed and let the surplus run down or out. Does that mean, as has been hinted in recent documents that the pension that we have currently have accrued would end up being reduced.
I understand current DC members and future employees wanting a better pension and I hope they get it, but not off the back of what I have accrued so far.
I have little time to do some thing about any reduction now as I plan to leave in 3 years time.
I did give some thought to taking it early, as can I trust RM or the union not to reduce what I have earned so far to pay for future changes.
A even worse worry is having taken it can it be reduced by these changes. Plus can those that are in receipt of their pension have their pension raided to pay for future pension changes?
None of this may be true and could be wide of the mark. But after 40 years service, it is not some thing I should be worrying about.

[TrueBlueTerrier]

Past accruals won't be affected, only future ones. https://worksmart.org.uk/pension-advice ... at-are-our" onclick="window.open(this.href);return false;

There is a law that prevents pension schemes from making retrospective changes that would cut benefits or rights that you have already built up without the agreement of each scheme member who is affected. The basic test is whether someone who has just left the scheme would have had their benefits affected for the worse if the proposed change had applied. This can include losing guaranteed future increases, as the guarantee was made in the past.

The scheme actuary has to provide a certificate saying the change is not detrimental, or the scheme trustees must get the permission of everyone identified by the actuary as losing out. This protection only applies to benefits already built up, not future ones. So a scheme cannot easily decide that past service would be covered by a lower accrual rate, but can change the accrual rate for future service (as long as they act within the scheme rules.)

They can only reduce past accruals if they get the agreement of each affected member.

[k979aaa]

Problem was created by government took the liability's off RM by getting rid of the final salary scheme too sell the business yet took all the assets of that scheme yet the scheme which they replaced it with has fell flat on it's face after only 7 years was this the plan all along? But not letting new members into that scheme was the death of it as you are not getting money in that scheme we and the union should have smelled the rat as soon as that was announced!

[Lincox]

The reason that the government took on the liabilities of the pension scheme is because it had a huge under funding debt caused by a ten year contribution holiday by Royal Mail at a time when it was in surplus and then compounded by the 2008 crash. Because of this Royal Mail could not be sold in to the private market unless it could get rid of its pension liabilities.
Royal Mail as a private enterprise could not take the risk of enrolling new staff in to the new DB pension scheme because of the high and unknown future costs of providing a salary based pension. Hence the introduction of a new DC scheme for new entrants over which they have control of costs as they only pay a percentage of earnings.
Their initial dogma about closing the current DB scheme and putting everyone into the DC Scheme is purely for the same reason of having control over costs. However they did not foresee the anger of the staff and refused to negotiate for over 12 months an alternative with the CWU.
Now they have been brought to the table and it is a certainty of any negotiated settlement that there will be winners and losers. The losers are those in the current DB Scheme that have a considerable amount of service still to work, this will not have a massive impact on those that are closing in on retirement. The winners will be those in the DC Scheme as they will now have option at some time depending on service to opt in to the new DB/DC Scheme whereby their contributions will be capped at 6% and the employer will pay the rest at a rate yet to be agreed but will be in excess of the 9% (10%?) max they pay at the moment in to the DC Scheme. This will also provide them with a minimum pension guarantee which they do not have with the DC Scheme.
The company are better off because they now have control over costs which I believe their negotiating position is that these should not exceed the annual contributions that they make in to the two current schemes.

[stephen500]

Past accruals won't be affected, only future ones. https://worksmart.org.uk/pension-advice ... at-are-our" onclick="window.open(this.href);return false;

There is a law that prevents pension schemes from making retrospective changes that would cut benefits or rights that you have already built up without the agreement of each scheme member who is affected. The basic test is whether someone who has just left the scheme would have had their benefits affected for the worse if the proposed change had applied. This can include losing guaranteed future increases, as the guarantee was made in the past.

The scheme actuary has to provide a certificate saying the change is not detrimental, or the scheme trustees must get the permission of everyone identified by the actuary as losing out. This protection only applies to benefits already built up, not future ones. So a scheme cannot easily decide that past service would be covered by a lower accrual rate, but can change the accrual rate for future service (as long as they act within the scheme rules.)

They can only reduce past accruals if they get the agreement of each affected member.

Thanks for the reply

[nataddick]

A thought .....During the transitional period until the WINR’s Version 2 is implemented (if it ever is) why not keep the existing RMPP scheme open to future accrual at reduced accrual rate of 1/80th as this is the target accrual rate for the new WINR’s scheme. Ideally, I would prefer it kept open to accrual at 1/60th but would be prepared to accept a 1/80th. This should reduce RM’s pension liability and it’s contribution during the transitional period. Transitional arrangements for RMDC scheme members to apply as proposed.

[Lincox]

Might involve a lot of administration for what might only be a short term fix but it could also be cheaper than setting up a new DB CASH scheme for a short term.

[monkey76]

The CWU seems intent on sacrificing the rights of the existing RMPP members in an attempt to provide a united pension solution for all. I will be voting ‘No’ to the latest ‘flawed’ proposal from the CWU and RM. It is pie in the sky, wishful thinking and it will cost the CWU, in terms of future membership support on pensions. We do not currently have a one pension solution for all and it is not needed. We all started from different positions and so it is a legacy of CWU membership that has resulted in the current dilemma.

Are we getting a vote?