Royal Mail Pension Scheme - Royal Assent

[ConeHater]

Royal Mail Pension Scheme receives Royal Assent
By Chris Dawson February 13, 2021 - 8:49 pm
One of the biggest issues in the bust ups in recent years between the CWU and Royal Mail was the Royal Mail Pension scheme. It took an act of Parliament to amend the pension scheme and this has now taken place.

Both the CWU and Royal Mail welcomed the Pensions Bill, which will enable the introduction of a new first of its kind ‘Wage in Retirement’ Royal Mail pension scheme for all employees, and has now received Royal Assent.

Royal assent means that the Queen has formally approved an act of legislature that can introduce the regulations to permit a Collective Defined Contribution type scheme to be introduced. The CWU have been pressing for this historical moment since 2018, and consider this to be a massive step in enabling the introduction of our new scheme under British law.

“We are keen to launch Royal Mail’s Collective Pension Plan in the second half of the next financial year and the next steps towards that are working with Government on the passage of the necessary secondary legislation and securing authorisation from The Pensions Regulator on our new scheme.

The CWU would like to thank our members and everyone else who have supported, believed and helped us reach this historical point.
In excess of 140,000 people will go immediately into this new scheme and will enjoy dignity and security in retirement as a consequence, and we hope others will follow, because current provision of working people outside of a Defined Benefit scheme is either inadequate or non-existent.”
– Terry Pullinger, Deputy General Secretary Postal, CWU
“We thank the Government and the Opposition in both Houses for ensuring a smooth passage of the Bill through Parliament. This puts the UK one step closer to enabling Collective Defined Contribution (CDC) pension schemes for the first time under UK law.

We are keen to launch Royal Mail’s Collective Pension Plan in the second half of the next financial year. We look to work with Government on the passage of the necessary secondary legislation, including tax changes, in a way which will allow our Plan to begin accepting contributions. It will also require authorisation from The Pensions Regulator.

Royal Assent puts us one step closer towards making CDC pension schemes a reality for Royal Mail and its people. We have been working closely with our union, the Communication Workers Union (CWU), on this. We will continue to work with them and others on our new Plan going forward. We will update our employees on progress as we move towards implementation. We will write to them with more details about our proposed Collective Pension Plan in due course.”
– Royal Mail
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[renrag40]

We are keen to launch Royal Mail’s Collective Pension Plan in the second half of the next financial year. We look to work with Government on the passage of the necessary secondary legislation, including tax changes, in a way which will allow our Plan to begin accepting contributions. It will also require authorisation from The Pensions Regulator.
Given all of the above needs to happen before the RM CDC scheme can start it just reinforces my view that it will not start until April 2022.... at the earliest. Add to mix that every major change to RM pension provision dating back to 1987 had a commencement date of the start of April
1987....... closing of Section B to new entrants and the start of Section C.
2008....... closing of the DB scheme to further accrual and the start of career average scheme.
2010....... change of the nra from 60 to 65.
2014....... decoupling of pensionable pay from actual pay.
2018....... closing of the career average scheme to further accrual. Start of the DBCBS.
2022....... closing of the DBCBS to further accrual and the starting of the CDC scheme?

[RobertT]

The reason all changes happen on 1st April is because the RMPP year starts on that date – it's the logical date for them to happen!
Annual statements are also dated on the last day otf the plan year - 31st March.

The only exception I know of was on 1st December 1971 and the creation of section B, which was way before my time.

As you correctly say we stopped accruing any more pension in 2018 which has since just increased by inflation each year and will continue to do so.

The DBCBS is basically just a savings account that payments into can stop anytime, with discretionary annual bonuses added each year.

I would agree that a 1st April start date for CDC would knit together with the RMPP better than any other date.
But with the current benefit structure of the RMPP effectively offering a deferred pension and a cash savings pot, and as CDC will be a completely new and separate scheme not connected to the RMPP in anyway, does it have to be 1st April.
The answer to that is no!

EDIT: There are already plans to change tax rules to enable CDC schemes, from the start of the new 2021/22 tax year: https://www.pensionsage.com/pa/HMRC-pub ... chemes.php

[heapsy]

What happened in 2014 was an absolute disgrace.

[renrag40]

What happened in 2014 was an absolute disgrace.

I agree..... but you have missed out 1987, 2008, 2010 and 2018. All changes that reduced benefits to members still contributing and to future members. To me the worst of all was 2010...... the changing of NRA from 60 to 65..... at a stroke, the loss of thousands in pension benefiTS. An absolute and utter disgrace..... and tantamount to day light robbery.

[heapsy]

I wouldn't like to be starting my working life now. I'd like the time back, but pensions will be hard to build up. Working until 70+ will be the norm.

[fly-catchers]

What happened in 2014 was an absolute disgrace.

I agree..... but you have missed out 1987, 2008, 2010 and 2018. All changes that reduced benefits to members still contributing and to future members. To me the worst of all was 2010...... the changing of NRA from 60 to 65..... at a stroke, the loss of thousands in pension benefiTS. An absolute and utter disgrace..... and tantamount to day light robbery.

And reading the material published at the time the original idea was to move the NRA60 to 62 as well!
I have calculated I have lost over £12000 because of the NRA65 change. And another £8000 from the moving of my State pension age to 66. Still at least we are living longer!

[Jefferson Starfish]

What happened in 2014 was an absolute disgrace.

Has anyone actually worked out how much pensions would have increased by if the link to wages had stayed, compared to the RPI increases since 2014?

[heapsy]

Wouldn't have thought so. You're right though. Tens of thousands. I'm not falling into the trap of taking any pension from RM early. That would be completely mad. I'll take them when they are due and dodge the tax man as much as I can. If / when the AVCs stop, I'll put that money into tracker funds which I will take tax free when it suits. Probably not when I first retire, interest rate on cash will still be too low.

[RobertT]

And reading the material published at the time the original idea was to move the NRA60 to 62 as well!
I have calculated I have lost over £12000 because of the NRA65 change. And another £8000 from the moving of my State pension age to 66. Still at least we are living longer!

I think I still have the same leaflet!

It says the company was 'making a recommendation to the Trustee to introduce a new type of DB AVC'.
That never saw the light of day!

[RobertT]

Has anyone actually worked out how much pensions would have increased by if the link to wages had stayed, compared to the RPI increases since 2014?

I hadn't until I saw your post!

Since Pensions Contrib Pay has featured on RM payslips(from April 2014), mine has increased from £341.26 to a current rate of £396.85. Which represents an overall percentage increase of 16.28%.

Over the same period, my basic full time pay has increased from £383.26 to £453.50(including the pending 2.7% pay rise). Which represents an overall percentage increase of 18.32%.

I make that my pension entitlement is worth 88.86% of what it would have been worth had it still been linked directly to my wages.

[renrag40]

Has anyone actually worked out how much pensions would have increased by if the link to wages had stayed, compared to the RPI increases since 2014?

I hadn't until I saw your post!

Since Pensions Contrib Pay has featured on RM payslips(from April 2014), mine has increased from £341.26 to a current rate of £396.85. Which represents an overall percentage increase of 16.28%.

Over the same period, my basic full time pay has increased from £383.26 to £453.50(including the pending 2.7% pay rise). Which represents an overall percentage increase of 18.32%.

I make that my pension entitlement is worth 88.86% of what it would have been worth had it still been linked directly to my wages.

..........And people think robbery is illegal...... not when applied to pension provision.

[fly-catchers]

Is some of the difference between the pensionable pay and the basic full time rate the removal of the £3328 LED?

[RobertT]

Is some of the difference between the pensionable pay and the basic full time rate the removal of the £3328 LED?

Obviously section C members have the Lower Earnings Reduction, but the point is that the pensions contrib pay and therefore my pension, hasn't kept pace with wage rises.
It's the percentages that are important!