Poll: 55% think more employers will offer collective DC pensions after Royal Mail

[TrueBlueTerrier]

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Employee Benefits Poll: More than half (55%) of respondents think that more employers will follow the example set by postal organisation Royal Mail and implement collective defined contribution (DC) pension schemes.

A straw poll of http://www.employeebenefits.co.uk" onclick="window.open(this.href);return false; readers, which received 44 responses, also found that 20% of respondents do not think organisations will start introducing collective DC pension arrangements, while 25% do not know whether collective DC pension schemes will increase in popularity or remain static.

Last month, Royal Mail confirmed that it will proceed with its new pay and pensions structure after approximately 110,000 of those employees who are members of the Communication Workers Union (CWU) voted in favour of the agreement.

Pension changes as part of the new deal included closing the Royal Mail Pension Plan (RMPP) to future accrual in its current form on 31 March 2018. This is to be replaced by a new collective defined contribution (DC) scheme, subject to the required legislative changes, which will run alongside a defined benefit (DB) cash balance scheme. Under these arrangements, Royal Mail will contribute 13.6% of a member’s pensionable pay.

Transitional pension arrangements have been implemented from 1 April 2018. This includes the introduction of a defined benefit cash balance scheme for RMPP members, with Royal Mail contributing 13.6% of pensionable pay towards members’ retirement lump sums, and a further 2% for all other member benefits, including death in service and ill health. RMPP members will continue to contribute 6% of their pensionable pay towards their retirement lump sums.

Members of Royal Mail’s defined contribution plan who have a minimum of five years’ service will also have the option to join the DB cash balance scheme. In addition, Royal Mail will increase its contributions to its DC scheme at each standard contribution tier by one percentage point, and all future and current DC pension scheme members in the standard section of the plan will be moved to the top tier of contributions, receiving a 10% contribution from the organisation, and contributing 6% themselves.

The pension changes have been designed to provide a similar level of member benefit as the previous DB provision, while significantly reducing risk for the organisation.

[Celgar]

A Poll from an organisation no one has heard of with only 44 people voting on it. I'm not sure it was worth mentioning or reporting on. More employers are currently starting defined benefit pension schemes which is where we should have stayed. If we increased the percentage employees paid in by a few points and RM agreed to pay some of the money they didn't pay in during their 'pension holiday' I'm sure it would have been possible to continue the DB scheme.

[NWpostie]

Its been running in Holland and Canada for some time, we would need to study their scheme and pick the best from them including not repeating the same mistakes they did.

[toomuchcoke]

Its been running in Holland and Canada for some time, we would need to study their scheme and pick the best from them including not repeating the same mistakes they did.

Whilst I agree with what you've actually written, what seems to happen when the UK government tries to do that is that they take something proven, understood and cost-effective from elsewhere in the world and turn it into something unproven, opaque and mind-numbingly expensive!

[BELIAL]

No s**t Sherlock ,money men get risk transfered to employees who are out of the reward circle. CWU headscratcher ,why are the workforce being given responsibility for the risk when they can get no possible reward?