Royal Mail pension news and discussion.Please note the advise given in this forum is unofficial, please use the links we have for a more detailed response or see an independent financial adviser.
Stark choice; Collective-plan 19.6% (6+13.6%) or Nest 8% (5+3%)
I was always under the impression that we had a choice, this doesn't sound like a choice, we're more or less being forced into this Collective-plan
I like my RMDCP and wish I continue with it but alas
But you will have the option to transfer out to a DC scheme if you want to:
What are my options if I want to transfer out of the Plan in future?
At any time before you start taking your benefits, you can ask the Plan’s administrators to work out how much the benefits you’ve built up would be worth if you wanted to transfer them into another pension arrangement. They’ll send you a statement and if you want to go ahead and transfer out of the Plan, you can.
This is an important decision. Your pension benefits are an important part of your finances. If you transfer them to a different pension arrangement, you could end up with very different levels of income, depending on how you end up using them. That’s why we would recommend that you talk to an independent financial adviser (IFA) before you make a decision. If your transfer value would be more than £30,000, the legislation that will govern the Collective Plan may make it a legal requirement that you talk to an IFA who is qualified to deal with transfers before you do anything.
It is the same choice you had when you first enrolled in any of the previous RM pension schemes. You either accept what is being offered or don't, the only difference now would be that you do have a choice of investing in the nest pension or nothing at all.
In practice everyone with at least 12 months service with RM will have 4 choices:
1. Join Nest and get 8% total contribution.
2. Join RMCPP and get a total of 19.6% and take your pension and lump sum anytime after 55(rising to 57 in 2028).
3. Join RMCPP, get 19.6% and transfer out into your own DC scheme which you can also amalgamate with your RMDCP and any other DC pension you may have.
4. Opt out altogether and give up a lot of 'free money'.
In practice everyone with at least 12 months service with RM will have 4 choices:
1. Join Nest and get 8% total contribution.
2. Join RMCPP and get a total of 19.6% and take your pension and lump sum anytime after 55(rising to 57 in 2028).
3. Join RMCPP, get 19.6% and transfer out into your own DC scheme which you can also amalgamate with your RMDCP and any other DC pension you may have.
4. Opt out altogether and give up a lot of 'free money'.
The choice isn't as straightforward as you make it sound. If, for example, someone intended to retire at age 57 then they would suffer a large deduction in their pension benefits (maybe 50% but we haven't been given any information so it could be more than that). It may not be easy (or even impossible) to transfer out a fund valued at over £30K (and we don't know how that fund would be valued). Some people could reach this valuation of their fund after little more than a handful of years. Try finding a financial adviser that would recommend that people transfer out of a DB scheme (and their advice will cost you a few thousand pounds), or any scheme that will take a DB transfer without that recommendation. I suspect that this scheme will prove just as problematic and costly.
If you paid the same 6% of pay into the NEST scheme then the total contribution would be 9% - far worse than the current DC scheme but it may still be the best option for some potential early retirees. The union should be thoroughly ashamed of themselves for not only allowing this to happen but actually conspiring with the employer to shaft some of their members.
I suspect that this scheme will be of most benefit to those who only have 4 or 5 years before they intend to retire. Anyone else is unlikely to see it meet their personal retirement plans, particularly if those plans involve retiring much earlier than 67.
Personal circumstances will always come into it in one way or another, and ultimately it's up to the individual to make the right choice for them, factoring in all the pro and cons.
There are still a lot of unknowns with this new scheme, some of which you've highlighted.
I assume you'll be making use of the consultation period and giving your feedback.
I consider myself to be quite an intelligent person but even I’m struggling to make sense of everything. I’ve read everything over 3 times and still confused.
I had planned to take my pension at 55, I’m now reading that the earliest is 57...do we know if that’s the same for all pensions ie is it a government directive or is it just certain pensions?
I’m in my mid 30s with a nice amount of investments (I’ve turned £5000 into £20000 in 20 months), and am retiring at 45 and funding my own retirement between 45 and 55. Obviously things change a little if I’m now having to fund 12 years not 10 myself.
The day is gonna come when we’re all gonna have to testify.
It's expected the legal access age for any pension will increase to 57 in 2028 and that increase will probably apply to most pensions. But there maybe exceptions as the exact rules haven't been decided on yet.
That increase will be in line with the state pension going up to 67. A ten year difference!
When the state pension increases to 68, probably in the mid to late 2030's, legal access age will in turn go up to 58.
There will probably be further increases to state pension age in the years to come which will see similar increases in the age at which company and private pensions can be accessed.
Plus there is always the possibility that a future government might change things again.
first time poster so be gentle :) I ve just gone through the booklet and nowhere does it mention who will actually be managing this pension fund, i assume thats quite important.
Also on page 1 'The benefits Royal Mail pension plans offer are subject to the rules of those plans and those rules can change. Royal mail has the right to change, suspend or withdraw any part of its pension arrangements at any time' so to me the terms look generous but they can change anything whenever they want?
I may be wrong but currently with the DC scheme when we retire we can shop around for an annuity that suits us individually. under the new pension we can't and the pension can go up or down at their will(whoever they are, i still don't know)
Im very sceptical as you can see
first time poster so be gentle :) I ve just gone through the booklet and nowhere does it mention who will actually be managing this pension fund, i assume thats quite important.
Also on page 1 'The benefits Royal Mail pension plans offer are subject to the rules of those plans and those rules can change. Royal mail has the right to change, suspend or withdraw any part of its pension arrangements at any time' so to me the terms look generous but they can change anything whenever they want?
The same applies to the current pension schemes.
I may be wrong but currently with the DC scheme when we retire we can shop around for an annuity that suits us individually. under the new pension we can't and the pension can go up or down at their will(whoever they are, i still don't know)
Im very sceptical as you can see
You also have the choice to transfer out your share of the cake to a DC scheme if you choose, where you can buy an annuity or use drawdown.
I'm I correct in assuming that you don't get to choose how your contributions are invested, like with funds in RMDCP.
Yes you are correct.
The trustees will decide where to invest it, with the help of the scheme actuaries.
I think the RMPP currently has at least 30 different fund managers investing around £12 billion. The new RMCPP will probably be fairly similar in time.
Does the reference to the fund going "up and down" only apply in terms of a return each year or does it mean that your pension could change once you have left the business and drawn your pension from the new scheme?
In terms of NRA60/65 pensions you get what you get year on year (plus increases annually). Is the new scheme the same or can it vary even after it is drawn?
