More than 100,000 postal workers signing up for new type of pension scheme

[TrueBlueTerrier]

https://www.dailyecho.co.uk/news/194544 ... on-scheme/

A new type of pension scheme is moving a step closer, with more than 100,000 Royal Mail postal workers being first in the queue to sign up, the Government has said.

The new collective defined contribution (CDC) schemes will work by both employers and employees paying into a central pool of cash.

When people retire, they will draw an income from the collective fund.

The new scheme has been made possible following the creation of the Pension Schemes Act earlier this year.

Minister for pensions Guy Opperman said: “We have seen the positive effect of these schemes in other countries and it is abundantly clear that when they are well designed and well run they have the potential to provide a better retirement outcome for members, and can be resilient to market shocks such as the pandemic.”

Launching a consultation on the new workplace pensions on Tuesday, the Department for Work and Pensions (DWP) will be seeking views on the draft regulations.

The rules are designed to enable the launch of single or multi-employer schemes, which will also accommodate the launch of the new scheme that Royal Mail and the Communication Workers Union aim to deliver.


CDC schemes will be subject to authorisation and a supervision regime to make sure they are well run, the Government said.

Currently, many workers are saving into defined contribution (DC) pensions, whereby they bear the risk of how well their investments will perform and how big their pension pot will eventually be.

Other types of workplace pensions may be based on the size of people’s salaries, but many employers have closed these schemes, as they have become expensive to run with people living for longer.

The CDC schemes are seen as a type of “middle ground” option, where the risks are more evenly spread.

Sir Steve Webb, a former pensions minister who is now a partner at pension consultants LCP (Lane Clark & Peacock), said: “Collective pensions could offer a positive ‘middle way’ between old-style final salary pensions where the employer took on all the risk, and more modern ‘pot of money’ pensions which have to be managed by the individual.

[Dindin]

Opt me out

[RobertT]

Opt me out

Based on basic full time pay of £458 per week and not including any pensionable allowances, opting out of CDC would mean having about £970 extra in your annual take home pay. Which you could then put into a personal pension and gain £240 in tax relief if you chose to.

Being a member of CDC will mean the benefit of tax relief and PSE, plus RM's 13.6% contribution. For a full timer that would add up to about £3,700, plus the £970 already mentioned.

It's your choice!

[badger1]

Me too. Don’t trust this scheme at all.

[heapsy]

For me, my biggest gripe is an even later NRA. Might be alright for mail centre workers, but delivery staff wont get to 67.

[Dindin]

Robert T I agree with being in a pension just not one that says it can go down. Meaning monthly payments will be low . I don't trust it like the other opp said above.

[Dindin]

Me too. Don’t trust this scheme at all.

I agree I hope it doesn't come into law I'm fine with the current scheme for the last three years

[clashcityrocker]

How do you plan for your retirement if you don't know what your income will be?

[RobertT]

Robert T I agree with being in a pension just not one that says it can go down. Meaning monthly payments will be low . I don't trust it like the other opp said above.

So take advantage of the 'free money' and transfer out to buy an annuity(income for life) or drawdown. Opting out completely is kicking yourself in the balls!

I agree I hope it doesn't come into law I'm fine with the current scheme for the last three years

The DBCBS was only ever meant as a transitional scheme until CDC starts.
The legal stuff is getting towards the crossing t's and dotting i's stage!

How do you plan for your retirement if you don't know what your income will be?

Maybe you should ask the CWU members that voted in their thousands.
Oh hold on! Most of them probably just saw a bit of backpay and said yes!

[badger1]

We were getting free money with the current scheme
Overwhelming feeling is we’re being used as a test for a new type of pension plan
What if it all fails? Where does it leave us? Why are other companies calling the scheme flawed and not using it?
Have starting transferring my pension before it gets dragged into the unknowns of CDC

[badger1]

Also we never got a vote on a CDC pension

[RobertT]

We were getting free money with the current scheme

Every pension scheme offers 'free money' from the employer and taxman.

Overwhelming feeling is we’re being used as a test for a new type of pension plan

Considering RM are the only company actively planning on introducing CDC in the near future, then it's obvious we'll be guinea pigs to some degree.
The first to do something usually are.

What if it all fails? Where does it leave us?

With a proportional slice of the cake, just as we would have if it doesn't fail.

Why are other companies calling the scheme flawed and not using it?

Everyone is going to have their opinion, whether that's about politics, football, pensions or anything else. It's not often you come across something that everyone agrees with.

There's been research that suggests other firms are interested in CDC:
https://www.pensionsage.com/pa/Just-7-e ... chemes.php

Have starting transferring my pension before it gets dragged into the unknowns of CDC

Why? CDC will not be connected to any existing RM pension schemes.

Also we never got a vote on a CDC pension

Not directly, but personally I think we probably should have been balloted separately.

It was part of the 4 pillars agreement, which got a 90% yes vote.

[enskied]

But Management now deny there was ever sush a thing as "the Four Pillars Agreement."

"Schemes will work by both employers and employees paying into a central pool of cash."

An ever decreasing number of fT workers in that pool.

[RobertT]

But Management now deny there was ever sush a thing as "the Four Pillars Agreement."

CDC may well be one of the few things that's remained from that agreement.

"Schemes will work by both employers and employees paying into a central pool of cash."

An ever decreasing number of fT workers in that pool.

The consensus among pension folk, is that a workforce of less than about 5,000 isn't really suitable for CDC due to economies of scale, etc. Hence multi employer schemes may well be the way forward if this type of pension is going to take off in the UK.

With a starting membership of around 140,000, RM's CDC scheme shouldn't really face that sort of problem any time soon.

[paulus103]

I've been at Royal Mail for 20 months and had no official information about this scheme.

Given how bad RM is at communicating is there anything that I've missed?

I know that my recent pension statement said I'd be looking at a pension worth £31 per week (I'm 43) :)