The Future of the Royal Mail Pension Plan The Proposal Explained

[TrueBlueTerrier]

The Future of the Royal Mail Pension Plan
The Proposal Explained

Dear Colleague,

Royal Mail has now commenced a legal 60 day consultation on the future of the Defined Pension Scheme, the Royal Mail Pension Plan (RMPP). This Members Bulletin is designed to explain, in plain terms, the proposal, who it directly affects, how the consultation process works and the CWU response to this proposal.

1. What is being proposed?

Royal Mail is proposing to close the Royal Mail Pension Plan (RMPP) on the 31st March 2018. This would mean that members of this scheme would not be able to build up any further pension benefits in RMPP.
Members of RMPP would transfer into the Royal Mail Defined Contribution Plan (RMDCP) from the 1st April 2018.
Death in Service benefits and Ill Health Retirement benefits would also be worsened from the 1st April 2018.
Benefits accrued in RMPP up to the 31st March 2018 would be protected, held in Trust and uprated each year by RPI (Maximum 5%) to maintain their value, and paid out at age 60 and age 65. The ability to request early payment of an actuarially reduced pension from age 55 onwards would remain.
The business is offering a one-off lump sum of £750 to RMPP members affected by the closure of their scheme. This can be taken as cash (tax and NI payable) or paid into the members RMDCP scheme (tax and NI not payable).
2. Who is directly affected by the proposal?

Everyone who joined Royal Mail before the 1st April 2008.
Royal Mail unilaterally closed the RMPP to new entrants from the 1st April 2008. From this date, new entrants joined the Royal Mail Defined Contribution Plan (RMDCP).
The RMDC Plan does not provide the guaranteed benefits that the RMPP does.
The CWU has been campaigning to improve the RMDC Plan for a number of years, and negotiated a number of improvements to the Plan in 2013.
The CWU strategy for resolving this issue will be radical and directly benefit both RMPP and RMDCP members.
3. What is the consultation process about?

When an employer wishes to make changes to a Pension Scheme, by law, they must consult with scheme members for a minimum 60 day period. This has now commenced and will end on the 10th March 2017.
The consultation process is for members to ask questions on the proposal and to also give their views whether they agree or not with the proposal. If members do not provide their views then Royal Mail will assume that you agree with the proposal. If you are happy to have a worsened pension then you do not need to take any action, if, however, you do not want your pension worsened then you do need to take action. A simple email or letter stating that you do not agree with the proposal will suffice. Send it to either of these addresses:
Email your view to: my.pension@royalmail.com
Send your letter to: Freepost MY PENSION, Pond Street, SHEFFIELD, S98 6HR
The company does not have to obtain your agreement for the proposed changes, but the more members who make it clear they do not agree with it will put pressure on the company to change their proposal.
4. What is the CWU Response to this proposal?

The CWU is opposed to Royal Mail’s proposal.
The CWU is currently in negotiation with the company on this issue and others.
These negotiations will continue throughout the consultation process and after it closes.
The CWU is developing a radical alternative proposal that will be designed to protect RMPP member pensions, and radically improve the pension arrangements of those members in the RMDCP. The principle that will be applied will be for equity of treatment for ALL members in their future pension arrangements.
This will be a very difficult goal to achieve, but RM’s proposal provides the CWU with a once in a lifetime opportunity to negotiate to equalise members pension arrangements upwards, not downwards as proposed by Royal Mail.
Members can greatly assist the Union by ensuring that you respond to Royal Mail during the consultation period making it clear that you do not agree with Royal Mail’s proposal

[mark.cup]

My email I just sent: I would just like to make a couple of points about this so called consultation why is everything I see painting the plans closure as the only option!

We have one of the few plans with a large surplus that has been eroded by a poor investment strategy that looks like it was designed purely to drain the pot so Royal Mail could then use it as an excuse for it's closure?

They say it takes money to make money and if wisely invested in a more aggressive manner for the long term i.e. Stocks and shares in a larger portion than currently the plan would be growing that pot of gold rather than it shrinking...

This whole thing is purely a money saving exercise at loyal workers expense we have one of the most physical jobs you can possibly do 5 to 6 hours walking a day and when are bodies can no longer cope with that how are we rewarded as employees with 20,30,40 years plus service a pension worth half of what we were promised a total disgrace.

Royal Mail says it will pay roughly the same tax and national insurance for the tax 2018/2019 how can this be true when god knows how many employees they will be paying a 10% pension contribution instead of the 17% that they do now it's the £750 bribe money that's being used in this figure pretending that all will invest it in the new scheme,let's have the figures for 2019/2020 then we will see what this is all about profit and shareholder dividends

Sent from my iPad

[Tman]

Shareholders will always take precedence over current and future pensioners; any other way would leave employees and pensioners potentially losing everything including their jobs, and that would help no-one.
No good squinnying to the government either...we're privatised now.

[fishtank]

It's a balancing act though Tman, shareholder dividends should be what's left once liabilities are paid and enough money for the business to invest and grow has been set aside. Once you start down the road of cannibalistic asset stripping it's never going to be a long term sustainable model anyway.

That seems to be where we're heading, last year's dividends were mostly financed through property sales which is obviously unsustainable, now it's pension cuts, how soon before PF and GLS are sold off for short term gains?....then what? There doesn't seem to be anybody in charge who can actually come up with a sustainable business model that actually involves running royal mail as a profitable business in its own right.

[Tman]

fishtank"]It's a balancing act though Tman, shareholder dividends should be what's left once liabilities are paid and enough money for the business to invest and grow has been set aside. Once you start down the road of cannibalistic asset stripping it's never going to be a long term sustainable model anyway.

True enough, and that may have been done in this case. Like all businesses though, RM likely has working groups set up to both reduce costs and increase profits long-term, and sadly like many other companies, the pension schemes will always come under scrutiny first.
The people who propose such radical changes to the RM schemes(s) probably morally justify it (change) by citing all the various companies who offer nothing at all, but that said, no company is ever going to wipe £millions off it's bottom line just so the current pension scheme continues unchanged.
That's the stuff of dreamers and the SWP.

[jetblack]

There doesn't seem to be anybody in charge who can actually come up with a sustainable business model that actually involves running royal mail as a profitable business in its own right.

We are banging our heads up against the deregulated free market wall - where the only path is the path of short term profit maximisation.

Whenever you have competitors that are able to offer the same service as yourself at lower cost by reducing the cost of labour (be it pensions/meal breaks/sick pay etc etc) then you are always pissing into the wind.

And that gentlemen, the deregulated free market, is the problem we face here. The race to the bottom. The duplicitous and covert transference of wealth away from those that produce it, to those who don't.

When we were privatised we were told that the private sector would introduce efficiencies into our business, thereby ultimately producing a better service.
So is this what we are seeing in play now? Is this the "grand plan" ? Robbing working people, the people that in our business most clearly and directly deliver the profits, of a semi comfortable retirement ?


If I run a chimney sweeping business and charge £100 per standard chimney sweep - and from this fee I am able to invest in my pension, buy commercial accident and 3rd party insurance, and pay my mortgage/ feed my family/ go on holiday once a year ie. have a decent life whereby I am adequately rewarded for my labour in one of the wealthiest nations in the history of the world.
Is it then acceptable if you then turn up offering to sweep a chimney for £50 a shot ? And its £50 from you cos you are sending your 8 year old child up the chimney + you have no insurance or pension costs.

The free market needs to be regulated - otherwise it becomes not very free at all.
And the likes of you and I are not going to have much to pass on to our progeny but a life of graft with no light at the end of the tunnel.

[windermeredave]

Does this in any way affect, present pensioners already drawing pension?

[RobertT]

Does this in any way affect, present pensioners already drawing pension?

No.

[Supersonicvandriver]

Hi all can you just stop paying in from april 1st 2018.??? as if I pay in for the next 18 yrs after this I will only be getting an extra 2k a year if I retire at 60. and i will end up putting 25k in up until that time. Getting 6.7k a year if I stop on 31st march 2018. I could save the 25k and that would be my lump sum. Can you just freeze what you have as of 31 march 2018. And not bother with the new plan. as it looks terrible.

[RobertT]

Hi all can you just stop paying in from april 1st 2018.??? as if I pay in for the next 18 yrs after this I will only be getting an extra 2k a year if I retire at 60. and i will end up putting 25k in up until that time. Getting 6.7k a year if I stop on 31st march 2018. I could save the 25k and that would be my lump sum. Can you just freeze what you have as of 31 march 2018. And not bother with the new plan. as it looks terrible.

1. You can stop after 2018 if you want to. Or any time before. But why would you want to?
2. The illustration we recently got is just that – there are no guarantees to what we’ll get from the new DC plan!
3. The illustration assumes that you buy an annuity(income for life) with your DC pot that offers similar benefits to what the current pension scheme offers. You do not actually have to do that. I’ve covered the alternatives here: http://www.royalmailchat.co.uk/communit ... 27&t=78246" onclick="window.open(this.href);return false;
4. Your contributions benefit from tax relief and salary sacrifice(PSE), which means a £25 per week gross contribution only costs you £17(based on basic pay of £412).
5. RM’s proposed contribution of 10% means that they’ll also be putting £41 per week into the pot.
6. In total they’ll be £66 per week going into your pension and it’s only costing you £17.
7. In the space of 18 years that would equate to the best part of £62k.
8. The new plan is terrible compared to the current scheme, but there’s absolutely no logic in opting out.