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

[RobertT]

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?

There's been no official communication about the specifics of CDC because it doesn't exist yet. RM are waiting on the necessary legislation and regulation to set up what will be the first CDC pension in the UK.

Unless something changes, CDC will replace all existing RM pension schemes.
The last official statement on a possible start date said they were hoping for the second half of the current(21/22) financial year.

More info can be found here: https://www.myroyalmail.com/2018pensionreviewqanda

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

You'll currently be in the RMDCP scheme managed by Scottish Widows, which is basically just a savings account with which you have options. One of which is to buy an annuity which provides an income for the rest of your life.

There are other options with a Defined Contribution(DC) scheme, as this link will tell you: https://www.moneyhelper.org.uk/en/pensi ... on-schemes

[paulus103]

But the existing fund is invested in the stock market and not cash-based?

I am part-time but always do the 37+ hours - it was a bit of shock to see my statement forecast (till I realised it appears to only include my part-time pension contributions)

I am putting a lot of money into my pension via an AVC into the RM pension as I'm in trouble pension wise given my age.

Are AVC's allowed in a CDC or is this one of the things to be decided?

[RobertT]

But the existing fund is invested in the stock market and not cash-based?

By 'basically a savings account' I mean it's just a pot of money which you, RM and the taxman all contribute. You decide where you want to invest it from the choices provided.

I am part-time but always do the 37+ hours - it was a bit of shock to see my statement forecast (till I realised it appears to only include my part-time pension contributions)

If you're part time and in the RMDCP, any OT up to full time hours(either 37 or 38 depending on if your office has gone through its revision) should also be pensionable.

I am putting a lot of money into my pension via an AVC into the RM pension as I'm in trouble pension wise given my age.
Are AVC's allowed in a CDC or is this one of the things to be decided?

The RM CDC scheme actually consists of two parts:

1. The CDC pension itself which aims to provide a pension of 1/80th of pensionable pay each year, with targetted inflationary increases each year.
2. The Defined Benefit Lump Sum Scheme, which provides a guaranteed tax free lump sum of 3/80ths pensionable pay, with discretionary increases each year based on investment returns.

The original proposal was to be able to pay an extra 1% into the DBLSS, which would be matched by RM. It remains to be seen whether that happens or whether there's the ability to pay anymore via another method.
If not, then you'll have to make your own arrangement via a personal pension(to still get tax relief), or other savings vehicle.

[heapsy]

Just a thought. I get that the lump sum would build up on the basis of 3/80 ths for every year of scheme membership. What happens IF the target figure of 1/80 th per year of membership isn't achieved? How will it work? What happens in the case of someone who only gets 4 or 5 years in the scheme?

[RobertT]

Just a thought. I get that the lump sum would build up on the basis of 3/80 ths for every year of scheme membership. What happens IF the target figure of 1/80 th per year of membership isn't achieved? How will it work?

The target is to provide similar benefits to a DB scheme, so 1/80ths of pensionable pay plus inflationary increases each year.

If there's not enough money in the pot to be able to pay out everyone's pension, they will go down. That will apply whether a member is employed, deferred or retired.
If there's more than needed, they will go up.

What happens in the case of someone who only gets 4 or 5 years in the scheme?

It doesn't really matter how long you're in the scheme, as you'll get a proportional slice of the cake in relation to your pay and CDC service.
Other factors such as average life expectancy will also be considered in how pensions are worked out.

[paulus103]

Will AVCs continue to be allowed?
Bit concerned as AVCs are the only way really I'll get a decent pot given my age

Thanks as always

[RobertT]

Will AVCs continue to be allowed?
Bit concerned as AVCs are the only way really I'll get a decent pot given my age

Thanks as always

I've already answered that upthread:

The original proposal was to be able to pay an extra 1% into the DBLSS, which would be matched by RM. It remains to be seen whether that happens or whether there's the ability to pay anymore via another method.
If not, then you'll have to make your own arrangement via a personal pension(to still get tax relief), or other savings vehicle.

[paulus103]

ah ok I did read that but wasn't sure if that meant AVCs

I'll have to keep working these crazy hours then given there is a possibility AVCs won't be continued. I keep my salary above the minimum wage level just.

I'm currently paying £150 AVC on top of my £73 pensionable pay bit.

Starting from scratch at 41 is not to be recommended :)

[RobertT]

Are you benefitting from PSE - it doesn't sound as if you are?

Your pension contributions should be in the left hand column on your payslip under the heading 'PSE Adj RMDCP', or something similar?

[paulus103]

I only drop out of PSE during holidays - which is where it gets messy.
It will be interesting to see how the average pay deal copes with that :)

I'm doing about 68-70 hours per week - although due to changes in processing/paperwork next week that might drop to 58 so might have to reduce my AVC.

I am unique in my mail centre in the roles I cover as a "reserve" and my duty - despite being "part-time".
I am cover for somebody who never does their actual duty so OT hours are always available and the role is important to the mail centre across all shifts.