ANNOUNCEMENT : ROYAL MAIL EMPLOYMENT POLICIES (AGREEMENTS) AT A GLANCE (UPDATED 2016)... HERE


AVC's

08 Aug 2017, 12:25

Taking the day to work out some finances, and got thinking about my pension. Still a while away yet, but would like to make more contributions.

Unfortunately i can't find my pensions booklet, but checking my contract, i started working with RM in May'07, and was put into section C. Didn't really tell me anything new as it says "PSE Adj RMPP C" on my wage slip.

I remember getting a booklet about AVC's a year or so back, but it went right over my head and didn't really answer what i was looking for.

Currently i'm putting £20.81 p/w into my pension. Being young and -rather- nescient about the whole situation, it's my understanding that RM match that payment. OK, easy enough, but i worked out that my contributions are 5.04% ...

So what is the maximum amount i can contribute, where RM will make at least the same, if not more? I'm sure i've read on here RM will pay a maximum of 9%, for a contribution of 6%.

Is this when the whole DB vs DC schemes come into play? I don't have any older wage slips to refer to for clarification on which plan im on :neutral:


AVC's

08 Aug 2017, 13:52

If you started in May 2007 you’ll be in section C of the Royal Mail Pension Plan(RMPP). You will have 10-11 months of final salary pension which takes you up to 31st March 2008 when the FS scheme closed. And around 9 years or so of career average pension from 1st April 2008 to the present day.

Being in section C you will have the Lower Earnings Deduction taken off your pay, giving you your pensionable pay. You then pay 6% of that figure.
RM currently pay 17.1% of pensionable pay into your pension.

This is what’s known as a defined benefit pension. What you get at retirement is defined by how much you earn and your length of service! Full details are here: http://www.royalmailpensionplan.co.uk/s ... an/library

It’s currently possible to pay AVC’s via the RMPP. You have two options:
Bonusplan and Flexiplan. Details here: http://www.royalmailpensionplan.co.uk/s ... nsion-avcs

However the RMPP is due to close on 31st March 2018 and based on the original proposals going forward from that date, no more AVC’s via Bonusplan & Flexiplan would be allowed. Details: https://www.myroyalmail.com/sites/defau ... ooklet.pdf

Since the above document was sent out, RM have changed their proposals and said we can choose between a Defined Contribution scheme or a ‘Cash Balance’ scheme. Details are a bit thin on the ground but they’ve provided us with this: https://www.myroyalmail.com/pensions/rm-pension-plan

Whether AVC’s would be allowed into either of these new schemes is currently unknown, but I would assume they probably would be.

AVC's

08 Aug 2017, 16:16

Your contributory pay is less than your actual pay because it is reduced by the Lower Earnings Deduction (LED), currently £3,328 a year, before calculating your pension contribution.

That explains why i worked it out as 5.04% then! Doing the math with updated figures shows 6% ... And now I understand what "Pensions Contrib. Pay" means in wage slip :Applause
So i pay in £20.81, and RM pay in £59.30 ( 17.1% ) ?

Im aware of the proposed changes next year, so thought best to take advantage while possible. I understand RM are proposing the 17.1% is unsustainable, so looking to provide either 7, 8, or 10% ( depending on wether you opt for a contribution of 4,5, or 6% ) ... I think i've understood this correct - that is, for the 'Defined Contribution Scheme' ( RMDCS ).
Alternatively, if opting for 'Defined Benefit Scheme' ( RMDBS? ) , RM will pay 13.6% ( instead of 17.1%? ) of pensionable pay.
I know these figures and proposals are open to change, but am i understanding this correctly at present?

Regarding 'Flexiplan' vs 'Bonusplan': Flexiplan seems simple enough, although i think i'm more attracted to Bonusplan.
If you work full time, you can pay in 4.5% of the first £3,328 of your annual salary. That’s around £150 a year.

However, it doesn't actually say how much RM will match...
If you earn less than around £15,300 a year, your employer will match what you pay in pound for pound. If you start earning more than this, your employer will carry on contributing, but not pound for pound. They’ll keep doing this until you start earning around £30,600 a year. These limits increase each year with inflation, so they will change over time.

Any insight on this? It isn't really clear.

Can't see them doing away with Flexiplan, though Bonusplan could be susceptible to change, and even if it were to be discontinued ( in its current form ) come March, then at least i have still taken advantage of the RM contributions... Something is better than nothing.

AVC's

08 Aug 2017, 17:27

Current members of the RMPP, will have two options based on RM’s latest proposals:

1. The cash balance scheme
2. A new DC scheme

Both will have 6% employee & 13.6% employer contributions.

The Current DC scheme(RMDCP) will have the 3 tiers of contributions you mention. This is available to those who either joined RM or joined a RM pension scheme after 1st April 2008. Plus those who have already taken their RMPP and continued to work for RM.

RM say that keeping the current RMPP open would mean them increasing their contributions to at least 40%, hence why they want to change things.

I pay into Bonusplan and I believe RM’s contribution to my fund is around £100 per year, but it will obviously vary from person to person depending on earnings. So only about £250 in total is going in per year. But factoring in tax relief and PSE, it’s only actually costing me about £100.

Under the original proposals they said that the current AVC’s will close on 31st March 2018, we have yet to hear whether that is still the case with the updated proposals! But I suggest if you want to pay into Flexiplan and'/or Bonusplan, do it now!

I assume we would be able to make additional contributions if we chose after April 2018 and they probably would go into either our ‘cash balance’ or our DC scheme, whichever we choose to join, rather than the existing Bonusplan & Flexiplan.

But until we’re given proper information, we can only speculate.

AVC's

08 Aug 2017, 18:31

Ok great, thanks!

Shall definitely pursue the Bonusplan. Always had it in my mind to have an investment fund with £1 / £2 a week... Will compare Flexiplan with what banks can offer.

Thanks again for help :thumbup

AVC's

09 Aug 2017, 19:11

RobertT wrote:
I pay into Bonusplan and I believe RM’s contribution to my fund is around £100 per year, but it will obviously vary from person to person depending on earnings. So only about £250 in total is going in per year. But factoring in tax relief and PSE, it’s only actually costing me about £100.



I pay into Bonusplan as well and that sounds about spot on to me Robert. I seem to remember the literature saying that RM put in the same as we as individuals put in. And I suppose thats about right after tax/NI/PSE
I reckon Alexei is as well to start contributing to Bonuspaln - even though it will be done away with in the near future and its relatively small potatoes in the grand scheme of things - if only because there maybe some kind of accomodation for those already paying into it come next year when the changes are afoot.

Alexei wrote:
Always had it in my mind to have an investment fund with £1 / £2 a week... Will compare Flexiplan with what banks can offer.


The stock markets are overvalued (have a look at historical price to earnings ratios and the impact of QE on the FTSE) and the banks are offering 2.5% to tie your money up for 5 years (inflation is at 2.9% BTW). It still costs 17% to borrow on your credit card mind you (even when the Bank of England base rate is 0.25%). You really need to be a bank, if possible :Very Happy

You already know what my answer is Alexei - but I am not a financial adviser and make no pretence at being one :wink:
Sufficed to say that if the next 12 months goes like the last 12 months my line manager will be getting a phone call from myself re. the shoving of jobs up certain managerial arses.
This is a conversation that I have rehearsed a thousand times in my head and one that I look forward to very much indeed.

AVC's

10 Aug 2017, 11:56

jetblack wrote:
I pay into Bonusplan as well and that sounds about spot on to me Robert. I seem to remember the literature saying that RM put in the same as we as individuals put in. And I suppose thats about right after tax/NI/PSE
I reckon Alexei is as well to start contributing to Bonusplan - even though it will be done away with in the near future and its relatively small potatoes in the grand scheme of things - if only because there maybe some kind of accomodation for those already paying into it come next year when the changes are afoot.

Small potatoes indeed, but i'm very much in the mindset of "Take everything you can" from this company. As stated, may as well take advantage while possible, and with a bit of luck, could be a shoe in if there is a future plan.

jetblack wrote:The stock markets are overvalued (have a look at historical price to earnings ratios and the impact of QE on the FTSE) and the banks are offering 2.5% to tie your money up for 5 years (inflation is at 2.9% BTW). It still costs 17% to borrow on your credit card mind you (even when the Bank of England base rate is 0.25%). You really need to be a bank, if possible :Very Happy

You already know what my answer is Alexei - but I am not a financial adviser and make no pretence at being one :wink:
Sufficed to say that if the next 12 months goes like the last 12 months my line manager will be getting a phone call from myself re. the shoving of jobs up certain managerial arses.
This is a conversation that I have rehearsed a thousand times in my head and one that I look forward to very much indeed.

Yes that is a pittance really, and I make more interest in my various current accounts :chuckle
I have a really good credit card from Halifax, 0% for 30 months, which I quite happily snapped up when reading about it from MSE :thumbup
Reading between the lines, I think your answer is Flexiplan, but i could be wrong and you're suggesting neither! ... And you're not alone there regarding your conversation, i'm sure it's one we have all had many times, over and over :chuckle

AVC's

11 Aug 2017, 18:10

Alexei wrote: I think your answer is Flexiplan, but i could be wrong and you're suggesting neither!


No I wasn't referencing flexiplan Alexei - though i do contribute a fair chunk into the flexiplan as well - I was referencing bitcoin.

AVC's

11 Aug 2017, 18:48

AH! How silly of me... I had no idea you replied to the thread in Canteen. I shall try be more attentive from now :chuckle

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