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Funding update for PO section of the RMPP

08 Apr 2017, 14:10 ... update.pdf

Full Valuation: Post Office section of the Plan

This update covers the last full valuation, which we do every three years, as well as the last funding update, which is carried out each year in between.
The most recent full valuation looked at the finances of the Post Office section of the Plan as they stood on 31 March 2015. This showed that it had assets of £377.9 million, compared with liabilities of £315.2 million, meaning that the fund was in surplus by £62.7 million.

Funding Update

A further check on the funding of the Post Office section of the Plan was made as at 31 March 2016. This showed that the assets had increased to £420.3 million and the liabilities had also increased – to £381.4 million. The surplus had therefore reduced to £38.9 million. We will carry out another check as at 31 March 2017 and will publish the results when they are available.

Assets: This means cash, property and other investments that can be drawn on to provide money to pay members’ and dependants’ benefits when they become due.
Liabilities: This means the Plan’s commitments to pay benefits in future to members and their dependants. The liabilities increase as members build more benefits and can also change due to changes in inflation, interest rates and life expectancy.

Why is the surplus reducing?

After the previous full valuation was completed in 2013, pensionable pay increases were linked to increases in the Retail Prices Index(RPI). At the same time, the Trustee agreed with Post Office that the surplus, in addition to its regular contributions, would be used to pay for the new benefits members were building up each year. This allowed Post Office to keep their section of the Plan open and for members to carry on building up benefits. This is the main reason that the surplus is reducing, but the impact of ongoing low interest rates, also plays a part in making the cost of providing benefits more expensive.

If you were employed by Post Office on 31 March 2017, this makes you a ‘Post Office Employee Member’ or ‘Employee Member’ for short.
The pension benefits you built up to 31 March 2017 are secure and will continue to receive increases in accordance with the Plan’s rules.

Closure of the Post Office section

Employee Members stopped building up new benefits in the Post Office section of the Plan on 31 March 2017. Employee Members will be sent personal statements showing the value of their benefits, together with a leaflet explaining how these will increase. These should arrive in May 2017.

The Trustee has also reached a legally binding agreement with Post Office that any surplus left following closure can only be used for the benefit of members in the Post Office section of the Plan. No surplus can, or will be, returned to Post Office.

The legal part…

By law, we have to tell you the Plan’s funding level if it was wound up and its assets were used to secure all members’ benefits through insurance policies. Based on the funding level on 31March 2015, the Post Office section of the Plan could meet 100% of its commitments to members in this way.
Finally, we have to tell you that over the past year we didn’t pay any surplus assets to Post Office. Also, the Pensions Regulator has not imposed any orders on the Plan to change benefits or contributions.

Want to know more?

If you want to find out more about Plan funding, there are detailed documents available on request from the Pensions Service Centre:
• The Report of the last Actuarial Valuation sets out the full funding check at 31 March 2015.
• The Statement of Funding Principles sets out the funding strategy and target.
• The Schedule of Contributions shows how much money your Employer (Royal Mail Group or Post Office Limited) is paying into the Plan.

Any questions?

If you have any questions or need more information, you can contact the Pensions Service Centre:

Write to: Pensions Service Centre, PO Box 5863, Pond Street, Sheffield S98 6AB

Or call: 0114 241 4545 (or Postline on 5456 4545)

You can call anytime from 8.30am to 5.00pm, Monday to Friday. We are usually busiest from 11.30am to 2.00pm and on Mondays. Please quote your membership number in all communications with the Pensions Service Centre. If you call us as soon as you receive this illustration, you may find our lines are busy. Please be patient with us while we get round to answering your call.

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