RMCPP v DC Pension

[Jaggs]

So I've done some rough calculations based on what you might expect to get from a DC Pension Vs The RMCPP

If everything that could be invested into the collective plan went into a DC Pension after 20 years you would probably have about £240,000 (in today's money) in a pension pot.

This could provide £60,000 as a tax free pension commencement lump sum and using the "4% rule" an income of £7,200 per year.

In the RMCPP you would get £28,782 as a lump sum and an annual income of £6,396 and this would obviously be reduced if taking before 67

I do understand the union wanting the wage in retirements but given it would be cost neutral to the business why not let those of us happy to take the investment risk ourself stay in a DC Pension.

[RobertT]

Interesting..... but you're not really treating both schemes equally from an investment point of view.

I'm not sure where you get the £240k from, but the basics are you think the investments in a DC scheme will help it grow into a healthy sum of money over the course of 20 years. You can then use pension freedoms to access the money flexibly via drawdown.

But on the other hand you only expect to get the base accrual rate in pension and lump sum from the RMCPP, and think it's investments won't allow for any increases over the same 20 years, or presumably beyond while in payment.

Ideally I think there should be the option to have the same contribution level into both, but the company obviously want to ensure the majority of people join the RMCPP.
Plus the CWU membership voted for it in the 4 Pillars agreement!

You might be interested what some people in the pensions industry say about the potential difference between the two types of scheme: https://www.pensionsage.com/pa/Expected ... han-DC.php

[Wullie10]

In that article it states that in the early years the the DC schemes will be massive cash flow positive. I'm not sure about a Royal Mail scheme giving the ageing work force . Most will be taken within the next 5 to 15 years I'd say

[heapsy]

A very interesting article. However, Many people in RM, in particular those in delivery, will find doing another 10+ years impossible. The union have let down a huge number of its members by not making some provision for those people. Unlike back in 2008, when members were given the first two years of Career Average pension at 60. As you know Robert, your final years are your biggest earning years, and this deal, yet again pulls the rug from under the members feet. CWU should be disgusted with themselves. I wish now that I hadn't stood on every single picket line in the last dispute. I lost further pension accrual AND pay including overtime, for just about the worst outcome.

[steste]

A couple of youtube videos from the Institute and Faculty of Actuaries channel about cdc pensions with some focus on the royal mail's implementation, for anyone who may be interested.

https://www.youtube.com/watch?v=ly5FeM24WmY

https://www.youtube.com/watch?v=qrw6vLQnQ5A