The big losers

[stephen500]

Well after a good read of the "Red book". It is apparent who the big losers are.
Acting managers who have not been promoted by Apr 2014 will not have their increment due to promotion as part of pensionable pay.
According to the illustrations acting managers who have not been promoted by that date stand to lose up to £5000 per annum from what they could have expected to gain on promotion.
Ouch.

[UnhappyGremlin]

Is it wrong for me to have been cheered up by that?
Suppose it's what most of them deserve anyway, the way they treat us.

[k979aaa]

The big losers are everyone in the pension scheme if RPI exceeds 5% it has happened in my life time more than three times. Beware the royalmail are trying to make the business look even more attractive by losing their liability's namely our future pensions Moya does not have a royalmail pension just a big pension pot filled with our money earned of our backs.

[barrowc]

If Royal Mail were to offer us a pay increase by creating a new grade (we could all be PHGs again or OPGHGs I suppose) and promoting us all into it then we could theoretically also lose out on the pension (specifically the pre-2008 part which won't account for pay rises due to promotion from April 2014 onwards). There needs to be some safeguard that changes to the entry-level grades (OPG, OSG, LA1 and their equivalents in other parts of the business) can't ever be considered as promotions

[fishtank]

Section C members are also the losers because their RPI increase will not be applied to their entire pensionable pay.

The idea for the CSDB plan(post 2012) is to use your 31 March 2014 pay level as a template then remove the Lower Earnings Deduction of £3,328 and only then up rate what's left by RPI each year.
This will give a figure to be used to calculate the following year's pension "block".

This is not the same as getting an RPI equivalent pensionable pay rise.
5% of £16,672 is obviously less than 5% of £20,000.

[heapsy]

Looked at the examples and it seems we are in for a 20% reduction in our pensions, roughly speaking. In effect wiping out 20% of your total service when it comes to calculating your pension.

[RobertT]

Section C members are also the losers because their RPI increase will not be applied to their entire pensionable pay.

The idea for the CSDB plan(post 2012) is to use your 31 March 2014 pay level as a template then remove the Lower Earnings Deduction of £3,328 and only then up rate what's left by RPI each year.
This will give a figure to be used to calculate the following year's pension "block".

This is not the same as getting an RPI equivalent pensionable pay rise.
5% of £16,672 is obviously less than 5% of £20,000.

The LED reduction for Section C members has always been there, so anyone who joined the scheme between April 1987 and April 2008 will see their pensionable pay reduced by £3,328. So the only difference to now is that increases in final salary pension will be in line with RPI instead of wages. CSDB increases will essentially stay the same as they are now. But on a plus side, the LED was frozen by RM in 1999, otherwise it would have risen each year to a current level of £5,668.

Because Section A/B members don’t suffer this reduction, they pay more into the scheme to the value of about £200 per year (6% of £3,328).
Section C members also have the option of paying into Bonusplan which attracts RM contributions aswell, and is supposed to make up for at least some of the LED reduction.

[RobertT]

Looked at the examples and it seems we are in for a 20% reduction in our pensions, roughly speaking. In effect wiping out 20% of your total service when it comes to calculating your pension.

The important thing to remember is that the examples shown in the proposal booklet are exactly that – examples. They use 2 variables that can’t always be predicted with any degree of certainty, namely the rate of inflation(RPI) and the rate of potential future pay rises. Therefore they are only really guestimates of the amount of pension we might get.

[fishtank]

CSDB increases will essentially stay the same as they are now.

The proposal would change how we would work out your CSDB pensionable pay for future years:
• The basic pay elements would be calculated by reference to the basic pay elements of your CSDB pensionable pay at 31 March 2014.
• This amount would (after deduction of the LED for Section C members) increase by RPI inflation (up to a maximum of 5% for each year) to calculate the basic pay elements of your CSDB pensionable pay in the future.
• This means that this part of your CSDB pensionable pay would go up every year regardless of what happened to your actual basic pay, which might go up by less or more than RPI inflation.
Increments on your existing grade and pensionable allowances would be treated in the same way as they are for Final Salary pensionable pay. In other words:
• Any pensionable allowances that you earn above basic pay would be included in your CSDB pensionable pay as they are now.

http://www.royalmailchat.co.uk/communit ... 27&t=53474" onclick="window.open(this.href);return false;

[fishtank]

The LED reduction for Section C members has always been there

The point is a rise in pensionable pay(a pay rise) is applied to your pensionable pay before LED is deducted whereas the new proposals would deduct LED first then apply an RPI increase.
That is not the same thing and even if the pay rise and RPI were exactly the same it would amount to a cut in the value of your pension "block" for that year.

[RobertT]

CSDB increases will essentially stay the same as they are now.

The proposal would change how we would work out your CSDB pensionable pay for future years:
• The basic pay elements would be calculated by reference to the basic pay elements of your CSDB pensionable pay at 31 March 2014.
• This amount would (after deduction of the LED for Section C members) increase by RPI inflation (up to a maximum of 5% for each year) to calculate the basic pay elements of your CSDB pensionable pay in the future.
• This means that this part of your CSDB pensionable pay would go up every year regardless of what happened to your actual basic pay, which might go up by less or more than RPI inflation.
Increments on your existing grade and pensionable allowances would be treated in the same way as they are for Final Salary pensionable pay. In other words:
• Any pensionable allowances that you earn above basic pay would be included in your CSDB pensionable pay as they are now.

http://www.royalmailchat.co.uk/communit ... 27&t=53474" onclick="window.open(this.href);return false;

OK I didn't word my post very well, CSDB increases are based on pay at the moment, while 'pension blocks' go up with RPI. Under the new proposals both elements will increase by RPI.

[nataddick]

Many thanks Fishtank for identifying the distinction between pay increases before and after the LED.

The LED deduction as I have mentioned in previous posts means that our pension scheme is not as good as people think it is, or the press make it out to be, given the low wage structure for the majority of members. The latest proposal is a further attempt to limit the pensionable pay for members in the future.

I am still wading through the document but one of the most interesting points so far, appears on page 10 in relation to Contracting Out. The abolition of 'contracting out' means that both employees and the employer will pay higher National Insurance contributions. These will help fund the new flat rate state pension scheme. Employees who are members of the Plan will pay an additional 1.4% higher NICs on relevant earnings once these changes to contracting out come into effect. So, you can see why RM are reluctant to ask members to up their pension plan contribution rate.

'The increased cost to the company of these higher NIC's has been estimated as £75 million every year from 2016. The Government has proposed that employers will be given a "statutory override" to reduce benefits to recover these increased costs'

The above statement suggest that RM may be exploiting a Government proposal by using the statutory override to reduce benefits and costs. A political point that should be used against the Government by CWU and members lobbying MPs. The use of the word proposal is interesting in this context - is it legal at this point or are they attempting to use a potential loophole?

It goes on to say (I wish I had a digital version of the booklet that I could just copy and paste extracts in here!)

'If we reach agreement with the unions of the type we are proposing, the Company will (subject to the conditions of our agreement) bear the increased cost of employer NICs without further changes to your pension benefits until we have concluded our next review.' Elsewhere in the booklet this is stated as being 5 years time or 2018.

So, RM talk our the increased cost of funding being £300 million every year and now we know that £75 of that is coming from increased NIC's from 2016. So the funding gap attributed to 'financial markets' is actually £225 million per year from 2016.

The other key question relates to the retention of assets within the plan. We know that £2.2 billion was left in the plan to fund the final salary link per the preliminary acounts for the year ended 31 March 2013.

The total assets (Royal Mail Group and Post Office Limited) transferred were £28.5 billion, leaving £2.2 billion with the RMPP Trustee to match the liabilities (Royal Mail Group and Post Office Limited) relating to the final salary benefit for active members (as at 1 April 2012) that the Government did not take on. These remaining liabilities relate to the difference in increases to the final salary benefit that the RMSPS scheme provides for (at RPI) and the RMPP Trustee assumes (at RPI + 1%).

The pension proposal only offers a link at RPI. So I will be writing to John Millidge and the Trustees to ask, amongst other things :-

a) How RM knew to leave the sum of £2.2 billion within the plan - if there were no more recent actuarial or accounting valuations done since 2010
b) The size of the assets required to meet the liabilities of the plan from 1 April 2012 at RPI
c) The size of the assets required to meet the liabilities of the plan from 1 April 2012 at RPI +1%
d) Why the pension proposal was not offered to members at RPI + 1% when funding appears to be in place for it.
e) The composition of the £2.2 billion assets by asset type - so that the exposure to each class of asset can be determined.
f) Why is the cost of funding predicted to rise so sharply, given that our pension fund is managed by several fund managers and pension experts who are able to use various financial instruments to manage exposure to risk.

My current focus is on the funding side of the proposal - there are no doubt other issues but I want to tackle these points first, to see if I can get a meaningful response.

[bogstandard]

OK I'll ask because i don't know. how is this different from last time
i.e.. last time it was just imposed on us, how will this time be any different.

what i do know is average RPI for the last 53 years was 5.7%
and of those 53 years 19 were above 5%

don't know if I've helped myself or confused myself even further with this source
http://www.swanlowpark.co.uk/rpiannual.jsp" onclick="window.open(this.href);return false;

[stephen500]

OK I'll ask because i don't know. how is this different from last time
i.e.. last time it was just imposed on us, how will this time be any different.

what i do know is average RPI for the last 53 years was 5.7%
and of those 53 years 19 were above 5%

don't know if I've helped myself or confused myself even further with this source
http://www.swanlowpark.co.uk/rpiannual.jsp" onclick="window.open(this.href);return false;

I have posted your link on the CWU facebook page and given you credit. For the 31 years applicable to me , 7 are over 5%! I suppose you could say for the last few years it has not been. I have 7 to go!