LTB 280/24 – Royal Mail: PFSL – Pension Salary Exchange (PSE) – Nest Scheme

[POSTMAN]

https://www.cwu.org/ltb/ltb-280-24-roya ... st-scheme/

LTB 280/24 – Royal Mail: PFSL – Pension Salary Exchange (PSE) – Nest Scheme
No: 280/24

21st August 2024

Dear Colleagues,

ROYAL MAIL: PFSL – PENSION SALARY EXCHANGE (PSE) – NEST SCHEME

Branches are advised that our PFSL members in the NEST pension scheme will be receiving letters from Royal Mail shortly explaining that they are being auto-enrolled into Pensions Salary Exchange (PSE) and what the benefits are. Essentially, PSE, which is already available for other Royal Mail Pension arrangements, allows for eligible employees who pay National Insurance contributions to increase the amount of money they take home each week or month, without changing their Pensionable Pay, the overall level of contributions made to their pension or other Employer benefits they receive.

The PSE for PFSL members will be launched from 7th October and the benefits are explained fully in the comprehensive guide attached to this LTB. Members do not have to do anything – they will be automatically enrolled from 7th October. The Postal Executive has endorsed this position. There is though the ability to opt out of PSE – a form will be attached to the letter from Royal Mail and has to be returned by 13th September.

It should be noted that there are a group of members within the NEST scheme who unfortunately will not be eligible to take part in PSE as they do not earn enough per annum (for example, if they work part-time). To minimise risk, Royal Mail has set a minimum PSE participation level of £13,200 p.a. This position has been adopted to avoid negative impact upon certain state benefits and this will be explained to this group of members in a separate letter. We will keep the £13,200 p.a. figure under review with Royal Mail.

We obviously welcome the extension of PSE to our PFSL members in the NEST scheme. We have also agreed in principle, with the company (via this year’s pay negotiations) a joint communication informing members of the pensions available in PFSL. However, we remain disappointed that Royal Mail is thus far unwilling to offer the new pension scheme – The Collective Plan to our PFSL members. Our aspiration and indeed the policy of the Union remains to ensure The Collective Plan is available to all CWU members working in PFSL and we continue to pursue this with PFSL and Royal Mail.

Yours sincerely,

Andy Furey

Assistant Secretary

Mark Baulch

Assistant Secretary

Bobby Weatherall

A/Assistant Secretary

Clean link to PDF...
https://www.cwu.org/wp-content/uploads/ ... -Guide.pdf

[Duran]

Surely this is not a good thing long term. Come retirement i doubt colleagues who have reduced NIC would be entitled to full state pension. Am i right or have i read it wrong ?

[RobertT]

Surely this is not a good thing long term. Come retirement i doubt colleagues who have reduced NIC would be entitled to full state pension. Am i right or have i read it wrong ?

It might have had the potential to be the case before April 2016 when people were building up 2 elements of state pension:

1. Basic state pension – accrued by earning a minimum amount per week/year, equal to the Lower Earnings Limit.
2. SERPS/S2P/Additional state pension – accrued by how much people earned and so how much NIC's they paid.

Anyone in a contracted out company pension would be accruing pension via that instead of SERPS, and in return paid lower NIC's.

In 2016 that system was replaced by the new flat rate state pension, which is based solely on earning a minimum amount. That is currently £123 per week or just under £6,400 per tax year from one employer.

NIC's are only payable on earnings above £242 per week, so it's actually possible to have a job and accrue full state pension without paying any NIC's at all.

35 years worth of qualifying years from April 2016 will mean a full state pension.
For those with working history before then, which is basically everyone currently over mid 20's, you'll be under transitional arrangements and may need more or potentially less than 35 years, depending on your own specific work history.

[yubin282]

What's PSFL ?

Can we join the NEST scheme and Collective Plan ?