GSP Terry Pullinger with an update to members on CWU working with the government to develop our new pension scheme

Post by **TrueBlueTerrier** » 17 Jul 2018, 16:38

BELIAL · Post by **BELIAL** » 17 Jul 2018, 23:01

Paid off management bullshit. Fat cats take all the profit with zero risk on pensions contributions.
Workforce bear all the risk with no reward for their investment and no guarantee of a decent pension. Certainly is groundbreaking , are you surprised it is receiving unprecedented establishment support?
What a con, shameful.

Post by **Navalron** » 18 Jul 2018, 10:03

Jackanory. Jackanory. Bull...t.

Post by **stephen500** » 23 Jul 2018, 10:40

Well Terry, from a personal and selfish point of view, I hope the transition period lasts for another 2.5 years.
The last thing I want is a tiny period, of yet another pension scheme.
I presume, as you actually seem to say this, that the new scheme will not be in by next April.
Which I am guessing, if my view that you cannot change a pension scheme after the start of a pension year (April to March) is correct, means that for at least 2019-20, I will still be in the transition scheme. If by 2020-21 the new CDC scheme come in, I may just leave. What is the point of going into a new scheme for one year.
I appreciate this new CDC scheme should be better than just a lump sum for those who plan to be in Royal Mail for a long time and I wish you the best introducing it for them.

Post by **RobertT** » 23 Jul 2018, 13:00

stephen500 wrote:Well Terry, from a personal and selfish point of view, I hope the transition period lasts for another 2.5 years.
The last thing I want is a tiny period, of yet another pension scheme.
I presume, as you actually seem to say this, that the new scheme will not be in by next April.

My view is that the absolute earliest CDC will be introduced is April 2019, and that obviously relies on the legislation coming through before then. Which considering all our wonderful MP's will be going on their summer holidays soon and then they'll have Brexit to deal with, I doubt if they'll be the parliamentary time to facilitate CDC in the short term.

Which I am guessing, if my view that you cannot change a pension scheme after the start of a pension year (April to March) is correct, means that for at least 2019-20, I will still be in the transition scheme.

The change from section A to B happened on 1st December 1971 if I remember correctly, so there is a precedent for that, albeit a long time ago. But most if not all other changes since have started from 1st April.

Considering the DBCBS is just a pot of money aimed at funding the tax free lump sum along with RMPP/RMSPS benefits, personally I don't think there's anything really stopping the CDC pension year from starting on another date. But 1st April in any given year is still probably the most likely in my opinion.

If by 2020-21 the new CDC scheme come in, I may just leave. What is the point of going into a new scheme for one year.

Joining any type of pension isn't compulsory, so you can always opt out and stay employed if you choose.

As far as I'm concerned, whatever you get from CDC will still be of benefit, however small it may be. You can always just give it a purpose, like paying the car insurance or treating the grand kids, etc!

I appreciate this new CDC scheme should be better than just a lump sum for those who plan to be in Royal Mail for a long time and I wish you the best introducing it for them.

The income you're likely to get from CDC over your retirement is likely to be a lot more than what you save by not paying in to it in the first place.

As an example:

Your pensionable pay is £25,000 per year.
The CDC accrues at the rate of 1/80th's and the DBLSS at the rate of 3/80th's.
So after 1 year of employment you'll have a pension of £312 and a lump sum of £937, not including any investment growth or early payment reductions.

At a 6% employee contribution rate, you'll have paid in £1,500 gross, or just £1,020 when factoring in tax relief and salary sacrifice(PSE).

The lump sum is therefore effectively giving you most of your contributions back, and the yearly pension is 'profit' for the rest of your life.

I fully except there are no guarantees and the income could go down, but personally I see no logical or financial reason to opt out, even for just one year.

fishtank · Post by **fishtank** » 23 Jul 2018, 13:17

1/80th of £25k (assuming the entire £25k is pensionable) is around £312 and obviously 3/80ths is around £936.

Post by **RobertT** » 23 Jul 2018, 13:39

fishtank wrote:1/80th of £25k (assuming the entire £25k is pensionable) is around £312 and obviously 3/80ths is around £936.

I didn't think the maths looked right to be honest! I think I divided by 60 instead of 80.

The example is now edited!

The plan with CDC is that basic pay and pensionable allowances will be pensionable and they'll be no Lower Earnings Deduction.

Post by **stephen500** » 24 Jul 2018, 07:13

RobertT wrote:
stephen500 wrote:
As an example:

Your pensionable pay is £25,000 per year.
The CDC accrues at the rate of 1/80th's and the DBLSS at the rate of 3/80th's.
So after 1 year of employment you'll have a pension of £312 and a lump sum of £937, not including any investment growth or early payment reductions.

At a 6% employee contribution rate, you'll have paid in £1,500 gross, or just £1,020 when factoring in tax relief and salary sacrifice(PSE).

The lump sum is therefore effectively giving you most of your contributions back, and the yearly pension is 'profit' for the rest of your life.

I fully except there are no guarantees and the income could go down, but personally I see no logical or financial reason to opt out, even for just one year.

Terry the above you suggest is interesting in that is almost the same as the old care scheme was paying into my pension per year. Around £300 and about £900 lump sum. It makes me wonder why they have bothered with the change, if we can expect to get the same outcomes?

fishtank · Post by **fishtank** » 24 Jul 2018, 12:55

Around £300 and about £900 lump sum. It makes me wonder why they have bothered with the change, if we can expect to get the same outcomes?

Two reasons.

1. Unlike the defined benefit scheme there is no guarantee of a minimum benefit, theoretically you could end up with less than you pay in.

2. The employer has no liability for any potential deficit, the whole scheme could collapse and it would not affect the business at all.

My own personal opinion is that for the scheme to have any long-term viability it will have to find continual ialternative nvestment from other sources than Royal Mail members, that could mean allowing other funds to transfer in, it could feasibly end up as a giant multi-industry pension vehicle for those who want to convert a DC pot into a pension income. You can see why First Actual are pushing for this, it could be worth a great deal of money for them.

Post by **RobertT** » 24 Jul 2018, 16:06

stephen500 wrote:Terry

Lol!

the above you suggest is interesting in that is almost the same as the old care scheme was paying into my pension per year. Around £300 and about £900 lump sum. It makes me wonder why they have bothered with the change, if we can expect to get the same outcomes?

CDC aims to provide similar benefits to the now closed DB/CARE scheme, in as much as it accrues at similar rates and hopes to provide inflationary increases each year. But nothing is guaranteed! Just because in theory you'll get roughly the same, doesn't necessarily mean you actually will!

RM might not be able to continue with their agreed £400million yearly contribution.

The workforce might decrease or have a higher proportion of part timers, meaning the cost savings of a scheme with a big membership might reduce.

Investment performance might not be as expected.

Live expectancy might be turn out to be higher than predicted.

There could be inter-generational issues.

Etc, etc.

Personally I don't think CDC is a panacea for pensions as nothing is ever going to beat a good final salary scheme! But I don't think it's the work of the devil either, as some on here seem to think.

It's a reasonable attempt to provide a reasonable pension, considering the constraints that RM have put on it(money & reluctance to take any risk), and it's a move away from the usual DC alternative when a DB scheme closes.

Only time will tell if it's a success. But I do agree with Fishtank, that the future of CDC could be massive multi-industry schemes with potentially millions of members, rather than separate companies, however big, going it alone.

Post by **stephen500** » 25 Jul 2018, 07:19

Apologies for the "Terry"... Personally I am glad I have 2 and half years to go. Hoping this year and next to be in transitional and then may remain for one last year in CDC for death in service benefit. (that would be my only reason for staying in it) Can't see the point of one year. I also hope with a year to go, Royal mail will offer me evr of two years pay!

Post by **RobertT** » 25 Jul 2018, 16:16

stephen500 wrote:Apologies for the "Terry"...

No need to apologise, I found it quite funny.

Personally I am glad I have 2 and half years to go. Hoping this year and next to be in transitional and then may remain for one last year in CDC for death in service benefit. (that would be my only reason for staying in it) Can't see the point of one year.

Personally I plan to go in about 4.5 years time at age 55, so won't build up much CDC pension either. But the general rule with pensions is always join a company scheme to take advantage of the free employer contributions, not to mention the tax relief and PSE!
So I have every intention of joining up to take whatever I can, however small it may be.

I also hope with a year to go, Royal mail will offer me evr of two years pay!

Don't we all!