CWU & Royal Mail Dispute/Protecting the Four Pillars Agreement

[rogersh]

The protection of the four pillars agreement obviously includes the proposed CDC pension scheme. The 2018 review update states; Important legal note: "....Royal Mail reserves the right to amend, suspend or withdraw all or any of its retirement benefit arrangements and/or Pension Salary Exchange at any time...."

[RobertT]

By law every company in the UK has to offer their employees a pension scheme and pay a minimum contribution into it, which is currently 3% of pay*. Although workers can opt out if they choose to.
*The definition of pay can vary in different companies, such as with RM's use of the LED.

RM currently pay in a lot more than 3% and ultimately there's nothing stopping them from changing what they pay and the pension/s they offer, other than the CWU and its membership.

RM seem intent on saving money from wherever they can and running roughshod over the 4 Pillars agreement. So personally I'd be surprised if they haven't considered ditching CDC and/or lowering their contributions.
Although there has been a certain amount of work already done on CDC, not least a government consultation that wouldn't have happened if it wasn't for the 4 Pillars, it would mean a serious amount of egg on Rico's face.

PSE was set up predominantly for RM to save on employers NIC's when the rates increased following the abolition of contracting out of the state second pension. So I can't really see the point in them stopping that.

The workforce obviously benefit from PSE as well when paying their pension contributions(including AVC's), Partnership & Matching share scheme and other things to be found on My Bundle.

[Woody Guthrie]

I think since the CDC will ultimately remove any risk from RM it is likely they'll still pursue the scheme, The current temporary DBCBS is a risk to the balance sheet (although small) so it's unlikely they'll want that to continue much past 2022. It's also a poor long term pension investment vehicle for us.

Two things might happen, they may propose to reduce the proposed employer contributions to the CDC scheme or if it looks unlikely that the CDC scheme will be up and running within 3 years or so they may try to move us all into the DC scheme again.

[RobertT]

The mediators report during the 4 Pillars negotiations, said the DBCBS only has a lifespan of 5 years before it gets too unaffordable for RM. So there will need to be alternative arrangements in place by 2023 using that as a guide.

The plan was CDC, but the legal side of things has stalled due to not knowing when the next state opening of Parliament is going to be, let alone if CDC will be included in the Queen's speech or not.

But most importantly in my opinion, RM want to save money!

The current pension arrangements cost about £400 million per year, as does the proposed CDC plan, based on the current level of workforce.

They want to reduce numbers by 20,000 which will lower that bill.

They could also lower the contributions into CDC, but personally I can't see it being a viable proposition with drastically reduced cash going in. Therefore if RM want to save as much money as they can, then it's probably DC at reduced contribution levels.

I would hope they would still want to provide us with a decent level of pension, but this Rico bloke is just out to make as much money as possible, so who knows.

CDC is largely risk free as far as RM is concerned – there is some with the DBLSS! But there are obviously added costs and hassle with setting it up and managing it, etc. But they already have a DC provider in Scottish Widows, so moving us all over to that would be the their ideal solution in my opinion.

If they go down the TUPE route, then you can forget 13.6% or even 10% - it's up to 6% only. But what you've already accrued is protected.

I would agree that if CDC doesn't happen for any reason, then we'll probably end up in an individual DC scheme as RM originally planned. I'm not sure if there's any other alternative.

[rogersh]

Robert/Woody - Good summary of current & future eventualities. I wonder if Terry Pullinger & Jon Millidge think any change is probable!

[RobertT]

As pensions formed one of the 4 Pillars and as Rico wants to ignore that agreement, I would hope that Terry and the CWU are ready for any change in RM pension policy!

And as Rico seems to have booted out most, if not all the people that negotiated the 4 pillars, John might be more concerned about his job?

I think if CDC does bite the dust, it'll be a big shame for those two men who've obviously worked hard on our behalf.
It's not perfect, but personally I think it's a genuine attempt to provide a decent pension for the RM workforce and could potentially be a game changer for pension provision in the UK as a whole.

For that to be lost because Rico wants to make as much profit as possible, or for the government to decide that sorry, CDC isn't on the agenda after all, would be very disappointing.

[rogersh]

I believe Terry Pullinger put the pension pillar at the forefront & agree it is a valid attempt to offer a "wage in retirement", mainly to benefit future employees, which has been unfortunately delayed.
The departure of Sue Whalley was an indication of what has happened latterly.

The Four Pillars Agreement said it "ensures that change is a consensus evolution.... , it protects our current and future members and positions our Union to shape a successful and secure future for our members".

Maybe the days of mutual interest approach are evaporating.

[milly]

I always thought this scheme was too ambitious from the outset and I very much doubt it will ever be implemented.

[Decky Boy]

There's rather too much negativity in the posts above for my liking. Any suggestion that the CDC Scheme isn't going to happen or more importantly that the 4 Pillars Agreement is to be torn up. . . should have every Postal Worker in this fine country of ours frothing at the mouth ! ! !

I think we have a massive scrap coming our way and we will all have to dig deep in defence of our hard won recent agreement.

[postareale]

Robert/Woody - Good summary of current & future eventualities. I wonder if Terry Pullinger & Jon Millidge think any change is probable!

As pensions formed one of the 4 Pillars and as Rico wants to ignore that agreement, I would hope that Terry and the CWU are ready for any change in RM pension policy!

And as Rico seems to have booted out most, if not all the people that negotiated the 4 pillars, John might be more concerned about his job?

I think if CDC does bite the dust, it'll be a big shame for those two men who've obviously worked hard on our behalf.
It's not perfect, but personally I think it's a genuine attempt to provide a decent pension for the RM workforce and could potentially be a game changer for pension provision in the UK as a whole.

For that to be lost because Rico wants to make as much profit as possible, or for the government to decide that sorry, CDC isn't on the agenda after all, would be very disappointing.

Actually, Jon Millidge appears to have quietly left Royal Mail on around April 8th, 2019. See the attached excerpt from RMG's 2018/19 Annual Report. He was replaced by Mark Amsden, who is now called, Group General Counsel and Company Secretary. Chief Risk and Governance Officer at Royal Mail Plc. How is that for a lengthy title?

So with Millidge's departure, following the previous departures of Moya Greene and Sue Whalley, there is no one now on the RMG senior executive team originally involved with the negotiation of Four Pillars agreement. Terry and the CWU are on their own now to ensure the terms are fully respected.

Rico has also consolidated the Chief Operating Officer and Chief Finance Officer roles under Stuart Simpson. He has elevated Sally Ashford, previously Director, Rewards to the Chief Human Resources Officer role to ensure that executive bonuses and shares awards are fully maxed out.

The entire RM focus now is on the bottom line not the workforce. Four Pillars agreement will be binned and an attempt made to negotiate a new agreement with none of the prior provisions intact. Stay tuned.

Decky Boy has hit the nail on the head,

"I think we have a massive scrap coming our way and we will all have to dig deep in defence of our hard won recent agreement."

[SpacePhoenix]

There's rather too much negativity in the posts above for my liking. Any suggestion that the CDC Scheme isn't going to happen or more importantly that the 4 Pillars Agreement is to be torn up. . . should have every Postal Worker in this fine country of ours frothing at the mouth ! ! !

Until the required legislation has gone through parliament and been made into law, the CDC can't happen

[rogersh]

Robert/Woody - Good summary of current & future eventualities. I wonder if Terry Pullinger & Jon Millidge think any change is probable!

As pensions formed one of the 4 Pillars and as Rico wants to ignore that agreement, I would hope that Terry and the CWU are ready for any change in RM pension policy!

And as Rico seems to have booted out most, if not all the people that negotiated the 4 pillars, John might be more concerned about his job?

I think if CDC does bite the dust, it'll be a big shame for those two men who've obviously worked hard on our behalf.
It's not perfect, but personally I think it's a genuine attempt to provide a decent pension for the RM workforce and could potentially be a game changer for pension provision in the UK as a whole.

For that to be lost because Rico wants to make as much profit as possible, or for the government to decide that sorry, CDC isn't on the agenda after all, would be very disappointing.

Actually, Jon Millidge appears to have quietly left Royal Mail on around April 8th, 2019. See the attached excerpt from RMG's 2018/19 Annual Report. He was replaced by Mark Amsden, who is now called, Group General Counsel and Company Secretary. Chief Risk and Governance Officer at Royal Mail Plc. How is that for a lengthy title?

So with Millidge's departure, following the previous departures of Moya Greene and Sue Whalley, there is no one now on the RMG senior executive team originally involved with the negotiation of Four Pillars agreement. Terry and the CWU are on their own now to ensure the terms are fully respected.

Rico has also consolidated the Chief Operating Officer and Chief Finance Officer roles under Stuart Simpson. He has elevated Sally Ashford, previously Director, Rewards to the Chief Human Resources Officer role to ensure that executive bonuses and shares awards are fully maxed out.

The entire RM focus now is on the bottom line not the workforce. Four Pillars agreement will be binned and an attempt made to negotiate a new agreement with none of the prior provisions intact. Stay tuned.

Decky Boy has hit the nail on the head,

"I think we have a massive scrap coming our way and we will all have to dig deep in defence of our hard won recent agreement."

Well spotted Postareale - I found this confirmation (although he is still with RM, not sure of his involvement as Pensions Director) - Change is the "buzzword" at present - Certainly seeing some changes.

Jon Millidge has been Pensions Director since June 2019 and is also the Pension Scheme Trustee of the Royal Mail Defined Contribution Plan.

He has previously worked as Chief Risk and Governance Officer from June 2018, Group HR Director from February 2014 and joined Royal Mail in 1985 as a graduate. He was worked across number of the business functions within the group and was the Company Secretary during the IPO.

[anini]

The CDC scheme isn't all it's made out to be especially with the retirement age of 67 and the reduction in benefits for taking it early. The unintended consequence of the scheme is pre pension poverty as most postie who can't and won't work until 67. A standard DC scheme with 13.6% contribution would have been better in my opinion. We can at least take our retirement plans into our own hands with a dc plan.
The interim plan is really bad for those not part of the DB plan b & c. They can also increase contributions by 1% which RM will match. No such option for DC members.
The contributions to the dc plan are maximum 10% and after the 5 year qualifying period the new scheme is not much better.
The pension agreement was primarily agreed for the benefit of plan b & c members. DC members got the short end of the stick once again.

[RobertT]

The CDC scheme isn't all it's made out to be especially with the retirement age of 67 and the reduction in benefits for taking it early. The unintended consequence of the scheme is pre pension poverty as most postie who can't and won't work until 67. A standard DC scheme with 13.6% contribution would have been better in my opinion. We can at least take our retirement plans into our own hands with a dc plan.

The CWU's plan with the 4 pillars was to provide a pension that provides an income for life, rather than a pot of money. CDC has got its faults but it does aim to provide an income, albeit one that isn't guaranteed. But there are plans for us to be able to take a cash value instead.
RM originally wanted to put us all in a DC scheme.

DC plans are more flexible, but you require large pots to provide a decent income for any length of time, and probably work best alongside a DB scheme to supplement income before the state pension kicks in.
If you've only got DC provision, you'd be in for a very uncertain financial future, unless you chose to buy an annuity which generally provide very poor value for money.

The NRA of 67 with CDC isn't great, but the scheme itself would offer lower returns if the NRA was also lower.

The interim plan is really bad for those not part of the DB plan b & c. They can also increase contributions by 1% which RM will match. No such option for DC members.

I would agree that the DBCBS is best suited to section A/B/C members, but the extra 1% matched contribution applies to the DBLSS scheme which will run alongside CDC to provide a lump sum. It's got nothing to do with the DBCBS.

The contributions to the dc plan are maximum 10% and after the 5 year qualifying period the new scheme is not much better.
The pension agreement was primarily agreed for the benefit of plan b & c members. DC members got the short end of the stick once again.

Personally and in general terms, I think anyone that switched schemes either from DC to DBCBS or vice versa, probably made the wrong decision. Most would have been better off staying where they were.

The pension agreement was for everyone to be put into the CDC scheme when/if that happens. The DBCBS and increased DC contributions(max 10% from RM) are just transitional arrangements.

[itinerant]

With DC schemes you really need to have an understanding of how they work and what the risks are. There are many factors and options. I only really took an interest when I left a job with a nice defined benefit scheme and had to take an interest in how DC schemes work and more importantly the fact you need a very large pot for it to be worth anything in terms of taking an annual income (as Robert T says). It is scary to realise that £100,000 DC pot will only provide you with between £2k and £5k a year if taken sensibly (by that I mean buying a guaranteed annuity or drawing down an annual sum yourself at a % rate designed to ensure your pension pot does not run out before you kick the bucket!)

I personally prefer being in the DC scheme but only as it suits my own circumstances as I will have a small DB pension + fairly decent Stakeholder DC scheme from previous jobs + savings to go along side. However for most people I think the CDC would definitely be the better option and far easier to understand despite the fact that the target income is not guaranteed.