Pensions presentation

[TrueBlueTerrier]

https://www.cwu.org/news/pensions-presentation/" onclick="window.open(this.href);return false;

CWU and Royal Mail leaders, and pensions experts gave a detailed presentation this morning on the progress of the collective defined pension (CDC) scheme, which was agreed under the Four Pillars.

And while hundreds of delegates heard the speeches, questions and answers, thousands of members around the country were able to listen in via video livestream.

After an update and some introductions by deputy general secretary Terry Pullinger, delegates heard detailed speeches from Royal Mail’s head of pensions strategy Douglas Hamilton and the company’s chief of governance Jon Millidge.

Douglas gave an historical perspective on Royal Mail and Post Office pensions, going back over the various changes of the past 50 years.

And Jon explained some of the structure of the new CDC scheme, as well as telling the audience about the robust modelling and testing that it has undergone.

Questions from the floor followed, on various issues, including the timetable of the scheme’s introduction and legislatice progress, rules on transfers of sums from previous plans, and even the potential effects of Brexit.

And panelists Paul Kennedy and Ray Ellis from the CWU, and actuaries Simon Eagle and Derek Benstead, from First Actuarial and Willis Towers Watson respectively, answered the queries in turn.

Concluding the session, CWU president Jane Loftus and DGSP Terry Pullinger again thanked the guests and panelists.

And Terry told conference that, even if the expected Queen’s Speech this year is delayed for political reasons, this will not necessarily delay the legislation necessary for CDC.

[RobertT]

Is this 'video' available to view online anywhere?

[TrueBlueTerrier]

Is this 'video' available to view online anywhere?

I am searching for it, but so far to no effect.

[FAB]

It was streamed live at the time. Hopefully they will post it again

[RobertT]

Is this 'video' available to view online anywhere?

I am searching for it, but so far to no effect.

I've looked too, but can't find anything either.

[Decky Boy]

Would 6th of April 2020 be a realistic date for the introduction of the new CDC Scheme ?

Many of us with decent AVC pots don't want to be in the current DBCBS any longer than is absolutely necessary

[RobertT]

Would 6th of April 2020 be a realistic date for the introduction of the new CDC Scheme ?

If everything goes as quickly as it can go from now on I think April 2020 is possible, but Brexit and the general current political landscape might prevent that?

We've had mixed messages as to what is needed for CDC to happen:
Initially we were told that only secondary legislation was needed, but after the consultation it was clear that primary legislation was the way to go.
Then we were told that is was going to be in the Queens speech at the next state opening of parliament(this month?). Now were told CDC could happen without that.

So who knows? I'm not convinced Terry Pullinger does!

Many of us with decent AVC pots don't want to be in the current DBCBS any longer than is absolutely necessary

By the sound of it I'm in a similar position.
In a lot of ways I think the DBCBS is quite good for the majority of RMPP members and section C'ers in particular, but the majority don't have any AVC's let alone substantial amounts in them.

However for those of us with large AVC pots, it may well mean that we end up with funds higher than the 25% tax free amount when we wouldn't have done without the DBCBS. So depending on personal circumstances a little bit of money management may be in order?

Obviously we have the option to reduce or stop paying into Flexiplan to allow for the extra DBCBS cash, which personally I have done.
I also plan to transfer out my Bonusplan funds into my personal pension at some point, which should help to negate the problem some more, and it also gives me more money to fund my early retirement without touching any of my other RMPP benefits before age 60.

But everyone will be in a slightly different position, so make sure you do the right thing for you!

[Decky Boy]

Thanks for the above post Robert. I've a few years left before retirement and even more till I reach State Retirement Age but am always considering where best to invest my hard earned cash.

Transferring Bonus Plan into a personal pension sounds like a sound solution. I want to continue utilising PSE to the max as long as I can. As you are aware " it's free money " and I a do not understand why more colleagues do not invest in the AVC Scheme, especially the Bonus Plan ?

If the personal tax allowance increases in the future as it has done over the last few years (circa £500 per year) the impact on lump sums (and tax payable on pensionable income) is likely to be favourable to us. AS has been said before ... much may change in the future ???

Do you know where I can find an updated summary on how the AVC funds have been performing recently, the last link you posted was dated December 2018.

[RobertT]

I don't really understand why more don't invest in at least Bonusplan either, but a lot of people don't think too much about their retirement until they get into their 50's. Unfortunately they could be missing out on 30+ years of saving a little extra, that could make a lot of difference to their future.

There's a link to the AVC factsheets in the library section of the RMPP website, they are now showing summaries as of 3rd May 2019.
http://webfund6.financialexpress.net/cl ... eID=443712" onclick="window.open(this.href);return false;

EDIT: The unit price is of the above date, the factsheets themselves are still dated 31st December 2018.

[maisymoo04]

probably because they look at the £2.88 sod that its not much is it I have 2 avcs bonus and flexi best thing ever done pitty didn't start them early.

[RobertT]

probably because they look at the £2.88 sod that its not much is it I have 2 avcs bonus and flexi best thing ever done pitty didn't start them early.

The general reaction in my DO to me paying AVC's are:

What are they?
Your pension is something you think about when you're old.
I never knew you could pay extra.
Why would you want to pay extra anyway, I'd rather have the latest iphone.

The good thing about AVC's is the tax breaks. So a £100 gross contribution only actually costs £68, making a 47% increase on your money straight away. Then you've got RM contributions(Bonusplan) and investment returns on top.

I've been paying into Bonusplan for the best part of 25 years. In that time I've paid in a net amount of around £3,000 factoring in tax relief and PSE, and am currently sitting on a pot worth about £16,000.
That's not a mega amount in the general scheme of things, but added to my main RMPP benefits it's got the potential to make a difference to my retirement plans and it's currently only costing me around £1.96 net per week.
It really is a no-brainer!

I also have Flexiplan which doesn't get any extra contributions from RM, but still benefits from the tax breaks and has seen a good level of returns over the years aswell.

The two plans combined have helped transform my RM pension provision from just about enough to survive on at age 65, to enough to retire on comfortably from age 60. Although I also have a personal pension designed to fund retirement before that.

It does require you to take an interest in your retirement from a fairly early age and/or save a lot of money, which I accept are two things that many people don't or can't do. But if you can, the rewards are a much better and earlier retirement than you would have had otherwise.

[maisymoo04]

I have opted for the 100% growth fund on them ? think that's a wise move Robert

[RobertT]

I have opted for the 100% growth fund on them ? think that's a wise move Robert

That would depend on your age, attitude to risk and what your retirement aims are, which are going to vary from person to person.

If you haven't already, I suggest you have a good read of the guide to AVC's and also keep an eye on the performance of the various funds that are available to invest in.

[Hawkey99]

Hi Robert,

Excluding % increases roughly what would the new scheme be worth to a full time postman after the first year.

Thanks

[RobertT]

Hi Robert,
Excluding % increases roughly what would the new scheme be worth to a full time postman after the first year.
Thanks

By 'new scheme' I assume you mean the DBCBS?

It's quite easy to work out how much is going into your DBCBS pot, but it's going to vary from person to person to some degree depending on how much of your pay is pensionable.
As long as you've got some payslips from 2018/19, the easiest way to work it out is:

Take your weekly contribution into DBCBS, divide by 6 and then multiply by 19.6 and then multiply that by 52.
In my case(section C) it would be:

22.54 / 6 x 19.6 x 52 = 3,828

*Although because we didn't get our pay rise until May, the actual figure is going to be slightly lower.

I currently pay in £23.28 per week, and if that continues for the whole of 2019/20, I will have another £3,954 in my DBCBS pot.

*The first 'annual bonus' isn't due to be added until 31st March 2020.