New Pay Deal :- pension contrib Pay

[mr hil.]

Will the pension Contrib Pay rate change by 2.7% with the new pay deal now agreed?
Will it also be backdated to April 2020.

I would presume it will increase and so our 6% deduction will increase too as well as Royal Mail's contribution to our DBCBS.

[JKSmudge]

Very good point - it 'should' result in a bit more into the pot on the 26th.

[freespeech]

Will the pension Contrib Pay rate change by 2.7% with the new pay deal now agreed?
Will it also be backdated to April 2020.

I would presume it will increase and so our 6% deduction will increase too as well as Royal Mail's contribution to our DBCBS.

My understanding is that it won't specifically get backdated BUT the reduction from pay when backdated monies are paid will "effectively" be the same.

[renrag40]

Pension pay and actual pay have not been the same since 2014.
The pensionable pay goes up each year by RPI and I think it increases at the start of each financial year. If this is the case then I don’t think we will pay any of the back dated money into the pension....... neither will RM ....... which is of more importance since they pay in at a rate of 13.6%

[RobertT]

Renrag40 is correct!

Pensions contrib Pay won't be increasing when we get the 2.7% pay rise.

Pay and pensions were de-linked in 2014, and since then both ours and RM's pension contributions have increased by RPI each April regardless of whether we get a pay rise or not.

The CWU released an LTB a while back explaining things:
http://www.cwu.org/wp-content/uploads/2 ... -Group.pdf

It usually happens from the 1st April so will often be on the last payslip of the financial year(week 52).

You can check yourself if you keep your old payslips, or else look at them on the RM People App.

[mr hil.]

Thanks for the clarification, I did have a vague memory of the RPI increase policy but thought that it applied to the "frozen" pensions that were no longer accruing...

Will this policy of delinked actual pay and pensionable pay apply to the new cdc scheme too. I ask because I remember reading a report that the way the RPI figure is calculated is going to be "updated" which will result in a lower overall figure very soon. This will have a major impact on all pensions etc that are linked to RPI.

[RobertT]

As far as I'm aware the de-linking only applies to the current scheme(RMPP) and won't apply to CDC.
In the original pensions agreement dating back to 2018, CDC pensionable pay is defined as 'actual basic pay plus pensionable allowances'.

We don't yet know how already accrued pension benefits(via RMSPS & RMPP) will continue to grow once the current arrangements close completely and before we actually take our pensions.
Personally I wouldn't be surprised to see those benefits that currently increase by RPI, see a change to CPI, as we will all effectively be deferred members.

There is also the longer term scenario of RPI being replaced by CPI(H) for pensions in payment, which is planned for 'no earlier than 2030', according to this article: https://www.pensionsage.com/pa/RPI-to-a ... rliest.php

Changes in the index used for pension increases might seem like a small thing, but over time the compounding effect has the potential to lower pension income quite considerably.