The Pension Solution.

[Lincox]

You will have a vote on the final agreement.

[Rommagic]

You will have a vote on the final agreement.

No offer yet.

[Lincox]

I did not say there was an offer. The vote will be on a final agreement if one is reached, otherwise strike action may be the alternative.

[fly-catchers]

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.

This makes rather worrying reading about changes to how your pension grows even once you are receiving it.
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[monkey76]

I did not say there was an offer. The vote will be on a final agreement if one is reached, otherwise strike action may be the alternative.

A vote on the whole deal? There’s a few at my place think we won’t get a vote. With something as huge as this pension pension issue surely they wouldn’t just push it through and there seems to be a lot of negativity on here regarding the pension solution so if that’s widespread and there is opposition on a large scale to it will have to go to vote.

[Lincox]

The whole deal will have to be put to the membership for a vote on accept or reject. The CWU executive do not have the mandate to make that decision, they will put forward a document to the membership putting forward their reasons why you should accept the deal that they have negotiated which will be subject to ratification by the membership.

[fishtank]

There's not a chance in hell of the membership having a vote on the "whole" deal since the shape of the future pension will not be known for what could be years.

At best members will be asked to trust their final pension solution to a forum made up of a mixture of CWU representatives and Royal Mail appointees. In the meantime we've yet to see what the final agreed transitional arrangement might be, that we may get to vote on.

[Lincox]

It could be that the pension issue is separated, however that would fly in the face of The Four Pillars so I will be surprised if it is. I think the extension of the legal guarantees could also be a challenge to agree a time span as that will also put a spanner in the works of Royal Mails future plans. However the fact still remains that any agreement whether in full or in parts will need to be ratified by the membership.

[Celgar]

I believe I read on here or somewhere else that RM have already received a 91 million pound tax credit for closing down the current pension scheme. I think Moya made a comment regarding the amount of money received that it wasn't much and wasn't anything to worry about.
I didn't realise that people who joined the RM pension scheme before 1987 did not have the first 4000 pounds of their wages taken into account when determining pension contributions from wages. It is referred to as the LEL apparently. Is that a government/tax office requirement or something that RM built into the pension scheme ?
I also don't think I knew that the majority of staff paying into the current RM pension are set up to pay the minimum contribution and receive the minimum contribution via RM. Who would I contact to check what contribution percentage I/RM are paying in ?

[Lincox]

Many pension schemes were set up to exclude the Lower Earnings Limit. This was obviously to reduce the cost to the employer but it also reduces the cost for the employee. One reason for doing this is that the Lower Earnings Limit was approx equal to the state pension benefits around that time and occupational pension benefits were to top up what you get from the state.
In respect of your contributions, it depends what pension you are in. If you are in the Defined Contribution Scheme administered through Zurich it depends what level of contribution you opted to pay. With this scheme you have access to your personal account through the Zurich website and you will be able to see what you contribute and what Royal Mail contribute. If you are in any other Defined Benefit Scheme you will be paying 6% less tax relief @ 20% so effectively it costs you 4.8%. As stated above if you are in a scheme that excludes the LEL you will only be paying your contribution on your pensionable earnings less the LEL.
In any of the Defined Benefit Schemes, Royal Mail are duty bound to make contributions which are deemed sufficient to cover the underlying liabilities of the pension scheme at any time, so it is not known what the true costs are. This is why many employers are ditching these schemes because of the uncertainty of the future costs to their companies.

[RobertT]

I believe I read on here or somewhere else that RM have already received a 91 million pound tax credit for closing down the current pension scheme. I think Moya made a comment regarding the amount of money received that it wasn't much and wasn't anything to worry about.
I didn't realise that people who joined the RM pension scheme before 1987 did not have the first 4000 pounds of their wages taken into account when determining pension contributions from wages. It is referred to as the LEL apparently. Is that a government/tax office requirement or something that RM built into the pension scheme ?

The LEL or sometimes known as the LED applies to section C members, which are those employees who joined between 1987 and 2008. It refers to the primary National insurance threshold and was frozen by RM in 1999 I think, at the figure of £3,328. The current threshold as decided by the government is £5,876, going up to £6,032 in April.

If you earn less than the government figure in any one tax year, you won’t be building up any state pension or getting any other benefits associated with NIC’s.

As far as RM section C members are concerned, although it means paying less in contributions, it also means a lower pension! But had RM not frozen it, our pensions would be much smaller.

I don’t know where the figure of £4,000 comes from, but that is wrong!

I also don't think I knew that the majority of staff paying into the current RM pension are set up to pay the minimum contribution and receive the minimum contribution via RM. Who would I contact to check what contribution percentage I/RM are paying in ?

Ultimately it’s up to the individual to make sure they’re paying in enough to get the maximum employer contributions, and to ensure their end pension will be enough for them.

Not only do you get tax relief on your payments as Lincox states, but RM also runs a Salary sacrifice scheme known as PSE, which reduces the cost to you down even more. So a 6% gross contribution only actually costs 4.08%.

I would have thought you could work out what percentage you pay from the figures on your pay slip, and then compare that with the info in the plan guide.

[stephen500]

Fish - I agree with you. The only ‘acceptable’ transitional Pension solution from the RMPP’s members point of view, is to keep the existing scheme open until the outcome of the proposed ‘revised’ WINR’s scheme is actually known. The latest declared surplus allows for this. My reading of the Mediator’s report on the Pensions Issue, is that we are being shafted by RM big time.

So, RM get to implement their latest Pensions proposal, leaving the longer term solution ‘up in the air’ with absolutely no guarantee that the necessary skeleton regulations under the Pension Act 2015 will ever be passed.The current RM proposal based on their ‘revised’ version of the original CWU WINR’s proposal moves from a DB scheme to a DC scheme and drops the target accrual rate from 1/60th to 1/80th, and a reduction in the employer’s contributions rate. For FFS when are the CWU going to get a grasp of the Pensions Issue.

The surplus is about to disappear, if the current scheme remains open without more contributions , then our benefits must be reduced. I have three years to go and no time to change my financial position. So, no I don't want the current scheme to stay open, if it means my pension/lump sum will be reduced.

[Lincox]

The benefits that you have already built up will not be reduced. Any change in accrual rates would only affect pension accrued from date of implementation. With only three years to go before you retire the likely impact to your pension and lump sum will not be significant and you always have the option of paying Additional Voluntary Contributions until you retire.

[nataddick]

We will have to wait and see what has actually been agreed. My view remains unchanged, in that, the only really acceptable transitional arrangement for existing DB members is to keep the current scheme open until the new CDC is actually open to members. Why would the CWU settle for less, given that there are legislative hurdles to overcome ?

Lincox, the impact on my pension is still significant with only 3.5 years to go! I have done the calculations. Unless, there is a major change to the new pension proposals, as outlined in the Mediator’s report,I will be electing to take control of my own DC pot rather than rely on the CDC scheme that is being jointly proposed.

[Celgar]

Many pension schemes were set up to exclude the Lower Earnings Limit. This was obviously to reduce the cost to the employer but it also reduces the cost for the employee. One reason for doing this is that the Lower Earnings Limit was approx equal to the state pension benefits around that time and occupational pension benefits were to top up what you get from the state.
In respect of your contributions, it depends what pension you are in. If you are in the Defined Contribution Scheme administered through Zurich it depends what level of contribution you opted to pay. With this scheme you have access to your personal account through the Zurich website and you will be able to see what you contribute and what Royal Mail contribute. If you are in any other Defined Benefit Scheme you will be paying 6% less tax relief @ 20% so effectively it costs you 4.8%. As stated above if you are in a scheme that excludes the LEL you will only be paying your contribution on your pensionable earnings less the LEL.
In any of the Defined Benefit Schemes, Royal Mail are duty bound to make contributions which are deemed sufficient to cover the underlying liabilities of the pension scheme at any time, so it is not known what the true costs are. This is why many employers are ditching these schemes because of the uncertainty of the future costs to their companies.

Hmmm. I suspected the LEL thing was government related to help businesses out.
I don't believe I was ever given the option to choose a contribution level. I have been a postie since 1997. I think I will ask our DOM about it tomorrow.
I asked our rep today about the vote and current strike ballot option in relation to a majority rejection of the pension changes. He told me the current ballot and forthcoming vote will not affect or be about any changes to our pension scheme/s. So you will just be voting on the pay rise and any other changes such as AHDC related stuff, later starts etc etc.