MRM.COM:Active RMPP members will need to pay more National Insurance from 6 April

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From this Wednesday 6 April, active members of the Royal Mail Pension Plan (RMPP) will need to pay more National Insurance contributions (NICs) as a result of the end of contracting-out.

On this date, the Government is introducing a new single tier State Pension for people reaching State Pension age on or after 6 April 2016.

At the moment, members of the RMPP pay less in National Insurance contributions (NICs) because they don’t earn the Additional State Pension. This is called contracting-out.

The current State Pension is made up of two parts: the basic State Pension and the Additional State Pension. RMPP members are contracted-out of the Additional State Pension. This is because the benefits they earn through the RMPP are expected to be higher than those they would otherwise have earned in the Additional State Pension.

In return for not building up Additional State Pension, the Government allows RMPP members and Royal Mail to pay National Insurance contributions (NICs) at a lower rate.

What does this mean for me?

From 6 April 2016, active RMPP members will pay an extra 1.4% NICs on their relevant earnings. Royal Mail will have to pay an extra 3.4% NICs on relevant earnings. These extra NICs go towards the new State Pension.

If you are taking part in Pension Salary Exchange (PSE) this should reduce some of the impact of the increase in NICs that you and Royal Mail will have to pay. If you opted-out of PSE when it was introduced in summer 2015, you can opt back in.

Further details

If you have any questions about the end of contracting-out and the increase in NICs, or about PSE, or would like to request an opt-in form, please call HR Services on 0345 60 60 603 (Monday to Friday, 8.30am to 5pm, not including bank holidays) or email advicecentrePAY@royalmail.com

For more information about the new State Pension, please visit http://www.gov.uk/new-state-pension" onclick="window.open(this.href);return false; or http://www.pensionsadvisoryservice.org.uk" onclick="window.open(this.href);return false;

If you have any general questions about your pension, please call the Pensions Helpline on 0114 241 4545 or email pensions.helpline@royalmail.com.