A separate vote for the final pension proposal?

[fishtank]

Yes! Which begs the question, would its introduction have created a deficit and more problems further down the line?

Although it's feasible that a DBCBS scheme could create a deficit it's just as likely to cause a surplus and unlike a DB pension it has pretty much fixed liabilities ( within target range ) since life expectancy doesn't play a part. I don't think it really has a limited lifespan at all if I'm honest. No more than the new scheme will have anyway. Unfortunately if the new cash balance scheme is outside the RMPP members will not enjoy the same tax advantages as they would have with the RMPP scheme.

[toomuchcoke]

As I said, we need something solid, definite, black and white, guaranteed, to vote yes or no.

Well you may have said that, but the specific comment of your's that I was replying to was "I can't find any point of view from which any of The Four Pillars of Security have been addressed". I would argue that there is such a point of view.

[nataddick]

I have had confirmation from RM Pensions that the DC option with an employer contribution of 13.6% is no longer on the table ! I guess RM/CWU jointly agreed to this without need for consultation/explanation with members and hoped it would not be noticed. Perhaps dingo could enlighten us ?

Robert - thanks for the latest information and the updated link. I will try to digest over the weekend.

[jetblack]

This is getting to be a (bad) joke. No matter which of the multitudinous schemes I may or may not be a member of the employer contribution should be exactly the same - it is, after all, my money - isn't it ? Its deferred pay.

Being as how its my money, should I not have the right, if I so choose, to invest that money as I see fit ? Rather than having to trust someone whom I have never met and whose motives are unclear, to invest that money on my behalf - as in the current "Collective" "Ambition" "Don't know what the f**k I'm gonna end up with" scheme ? Who, in their right mind, given the choice, would choose to do so ?
Furthermore, the investment choice available to me, given present day technological facilities available to each and everyone of us, should be global in scope - we have decentralised exchanges available today peeps. Don't be giving me the choice of a cash fund, an ethical fund and a FTSE 100 tracker FFS. How about Vietnamese fish farms, Polish beeswax, Icelandic electricity generators and monero ??

If it absolutely must be invested on my behalf - cos I need saving from myself, just like a 18th century African tribesman needed saving by an anemic Free Church missionary - then I want some guarantees. You don't, and will not, get to piss on my shoes and tell me its raining.

Its as simple as that.

This proposal is offering no guarantees.

The original WinRS proposal had some merit as it proposed to offer a defined benefit in retirement based upon the funds trustees having the ability/flexibility to invest the funds assets outwith punitively low yielding bonds/gilts. The current proposal offers no such defined benefit in retirement and seems to be saying nothing more (and this is coming not only from RMG but also the CWU) than "Trust me"

"Trust me" ? - are you having a f***ing laugh ? This is my and my kids future and you want me to "Trust" you ? Even given the decades of historical evidence that clearly shows that whenever the working man and woman has granted trust to others with their money they have, almost without exception, been shafted ? Sometimes the shafting has been overt - but mostly its been covert - as in the means by which our very own scheme has been degraded by Govt. policy.

Vote No.

Kind of embarassed to be a union rep at this point.

Not in my name.

[nataddick]

Jet - I am in agreement and will be voting ‘No’ unless the ballot paper provides a caveat on the Pensions issue.

Have the the CWU addressed the use of the eventual and inevitable RMPP surplus that will arise in the future ?

[RobertT]

Although it's feasible that a DBCBS scheme could create a deficit it's just as likely to cause a surplus and unlike a DB pension it has pretty much fixed liabilities ( within target range ) since life expectancy doesn't play a part. I don't think it really has a limited lifespan at all if I'm honest. No more than the new scheme will have anyway.

Most current employee members of the RMPP are in section C, so don’t get a lump sum as standard but have the option of giving up some pension to get one. And a majority choose to take the maximum 25% lump when taking their pension, which represents a fixed upfront cost to the RMPP. However the pension has an unknown long term cost to some degree, due to life expectancy and inflation.

The transitional DBCBS is designed to fund some or all of the lump sum, in a similar way to how AVC’s(Flexiplan & Bonusplan) do. So the bigger the ‘cash balance’ and/or AVC’s, the higher amount of unknown pension the RMPP has to pay out over a members retirement. Therefore the RMPP will have higher liabilities overall compared to now, and so there’s more potential for the investments to underperform their target and create a deficit. The longer the DBCBS stays open the higher the chance of that happening.

Unfortunately if the new cash balance scheme is outside the RMPP members will not enjoy the same tax advantages as they would have with the RMPP scheme.

I’m not sure I understand this comment Fish!

The transitional DBCBS will be ‘joined’ to the RMPP, and can be taken unreduced at either 60 or 65, as stated in the agreement. It’s aim is to fund the tax free cash!

The DBLSS will be ‘joined’ to the CDC, and can be taken unreduced at 67. I see no reason why the DBLSS would not be tax free. It would almost certainly represent less than 25% of your total individual CDC ‘pot’.

There is no reason why we won’t still get the same tax advantages going in(tax relief and PSE), and I think it’s highly unlikely there will be different tax rules to now, on the way out either.
One of the reasons the CDC scheme needs legislation to be passed is to ensure it complies with UK rules regarding flexibility and the ability to tax free cash. Although what materialises on that front, probably remains to be seen.

[jetblack]

Have the the CWU addressed the use of the eventual and inevitable RMPP surplus that will arise in the future ?

I can't answer that question Nat - but to go back to the disparity in employer contributions between the schemes ... Hilary Salt was just on Radio 4 explaining that the disparity was because RMG got a better "bang for the buck" (her words) with the CDC scheme as opposed to the DC scheme, and this is why they would be willing to contribute more to it.
But to my mind this is wholly unacceptable - it creates a two tier workforce yet again - because those in the CDC are being granted more (deferred) income. The inference is that members of the DC scheme choose to invest in penny stocks and chocolate teapot PLC. Even if that were true that choice should be theirs to make. They shouldn't be penalised for it.
Alternatively they may well invest in a balanced portfolio that actually outperforms the CDC pot, even with the supposed efficiencies of collective contribution. Given that the CDC will be targeting meagre returns (in order that the targets are met/surpassed) I'd say that this was the more than likely outcome. What are they targeting again ? RPI ? Hardly stellar returns when fund managers are averaging what, 3x that amount ?

Its not a question of "bang for the buck" for RMG Hilary - its a question of an equitable employer pension contribution to all workers. It is they (the workers), after all, who have the greatest incentive of all to achieve a "bang for the buck".

I can't believe the CWU are signed up to any of this

[fishtank]

Robert, with a cash balance scheme inside the RMPP you could in theory take two 25% tax free lump sums, one relating to pre-2012 accrual and one relating to post 2012 acrual.

With the new cash balance scheme outside the RMPP I doubt that you could do that.

[RobertT]

Robert, with a cash balance scheme inside the RMPP you could in theory take two 25% tax free lump sums, one relating to pre-2012 accrual and one relating to post 2012 acrual.

With the new cash balance scheme outside the RMPP I doubt that you could do that.

No you couldn’t !

As things stand the DBCBS will only be applicable to the RMPP(2012-2018). The RMSPS(upto 2012) will only come into play if the necessary rule changes are made.

Assuming that happens, then you could take your DBCBS cash along with either your NRA60(up to 2010) or NRA65(2010-2018), as per the agreement.

If it doesn't happen, then the DBCBS would almost certainly close.

[stephen500]

If the required legislation fails to get through parliamnent, is there a "Plan B"?

Probably to keep the inferior pension that starts in April.

According to the mediators report, the DBCB scheme has only got a lifespan of around 5 years, so the plan B is probably DC.

As I only have less than 3 years to go, I would actually like an option to remain in the temp DBCB scheme.

[fishtank]

Robert this is from one of the original Q&A sessions when the DBCBS was first promoted as a long-term pension solution by Royal Mail.

The Defined Benefit cash balance fund would first be used to provide the tax-free lump sum for Plan benefits accrued between 1 April 2012 and 31 March 2018 up to the maximum permitted under HM Revenue & Customs rules - currently 25% of the overall value of Plan benefits;

Any balance of the Defined Benefit cash balance fund leftover after Step 1, would then be used to provide the tax-free lump sum for the RMSPS benefits accrued up to 31 March 2012 that transferred to Government. Again, that would be up to the maximum of 25% of the overall value of RMSPS benefits under current rules;

[toomuchcoke]

I can't answer that question Nat - but to go back to the disparity in employer contributions between the schemes ... Hilary Salt was just on Radio 4 explaining that the disparity was because RMG got a better "bang for the buck" (her words) with the CDC scheme as opposed to the DC scheme, and this is why they would be willing to contribute more to it.
But to my mind this is wholly unacceptable - it creates a two tier workforce yet again - because those in the CDC are being granted more (deferred) income. The inference is that members of the DC scheme choose to invest in penny stocks and chocolate teapot PLC. Even if that were true that choice should be theirs to make. They shouldn't be penalised for it.

But if everyone is in the "defined ambition" scheme, which seems to be the plan AIUI, then there is no element of "two tier workforce".

Granted the "more bang for the buck" argument makes absolutely no sense at all. Indeed one could argue, from a certain POV, that if the Royal Mail has found a way to create a pension scheme which provides "more bang for the buck" then they have a fiduciary obligation to their shareholders to reduce the amount of buck they're providing? (i.e. If the idea would produce a better pension for any given level of money paid in, then they could reduce that level slightly thus reducing their costs whilst still provision a better pension - everybody would win, so what business wouldn't take that option?)

[jetblack]

Well, I spose we are all learning toomuchcoke, this is, after all, a ridiculously complex and convoluted way around the houses - but it was my understanding that the DC scheme will indeed still be an option - albeit with a reduced level of employer contribution.
Of course, as Nat has already stated upthread, the idea is to encourage us to all throw our hat in with the new CDC scheme. This much we know.

Two different levels of employer contribution cannot be justified when the employer is not defining a benefit on retirement for either scheme.

Who is going to be running the new scheme BTW ? Not Blackrock by any chance ? Just askin.

[Aquarius]

I have had confirmation from RM Pensions that the DC option with an employer contribution of 13.6% is no longer on the table ! I guess RM/CWU jointly agreed to this without need for consultation/explanation with members and hoped it would not be noticed. Perhaps dingo could enlighten us ?

Robert - thanks for the latest information and the updated link. I will try to digest over the weekend.

This actually angers me - i wanted the choice of choosing that option - i am guessing the powers that be ie CWU got scared that too many would choose the DC option. - and wanted that off the table just in case.

Also the fact that RM/CWU did not ask us but just brushed it away sums up the whole pension mess that we are now in.

[nataddick]

Did the CWU and it’s advisors, First Actuarial ever consider a DC Master Trust Pension scheme as an alternative to the now substantially inferior WINR’s proposal (when compared to the DB 1/60th pension campaigned for by the CWU with a 89.1% result) against ‘traditional’ DC arrangement’s ? If so, it would be helpful to know why this was dismissed and the rationale for it ?

I have actually been impressed with the honesty of the communications from First Actuarial during this campaign but then again, they are paid by the CWU to present a view, however flawed it may turn out to be !