As promised reply from Terry Pullinger:
Royal Mail Pension Review
Thank you for your email of 7th January concerning the above and your subsequent
enquiries. I apologise for the delay in replying.
As you know Royal Mail has started a consultation on the future of the Defined
Benefit Pension scheme after April 2018. At this stage, it is important to stress that
nothing has yet been agreed with the CWU and no final decision has been taken on
the future of the scheme.
Royal Mail is proposing to close the current Defined Benefit scheme for future
accrual after March 2018 and to transfer members into an inferior Defined
Contribution arrangement after that date. The key point to make in response to your
particular question about the Way Forward Agreement is that all service and benefits
accrued in the Defined Benefit plan up to March 2018 (including the calculation of
what’s included in pensionable pay) will be protected.
But while your benefits and the basis on which pensionable pay is calculated will
continue up to March 2018, the calculation of pensionable pay will change from April
next year. Currently, pensionable pay is made up of basic pay plus, in some cases,
pensionable allowances and pensionable bonuses. Section C members, who make
up the majority of current RMPP members then have the Lower Earnings Limit of
£3,328 deducted every year. Under the DC proposal, the Lower Earnings Deduction
would no longer be made and pensionable allowances and bonuses would no longer
be pensionable. This would account for the fact that the personal illustrations
received by ex-Cashco staff show pensionable pay changing from April 2018. Details
of the proposed changes to the way pensionable pay is calculated are set out on
page 10 of Royal Mail’s own consultation document and in the Question and Answer
section at: http://www.royalmail.com/pensions
. I would also encourage any individual
member who still has questions about their personal entitlements and circumstances
to contact Royal Mail directly by post: Freepost, MY PENSION, Pond Street,
Sheffield S98 6HR or by email: email@example.com
While the company’s proposals would see changes to the way in which pensionable
pay is calculated, the real problem we face is that from April next year, members’
future pension provision will be significantly lower as a guaranteed DB scheme is
replaced by an inferior DC arrangement. Overall, Royal Mail’s own illustrations show
that on a ‘before and after’ basis, members will lose on average 19% of their
pensions (if retiring at 60) rising to 28% (for those retiring at 65). Those employees
closest to their retirement age will be the least affected by the proposed change but
those employees who would spend longest in the DC scheme will suffer the greatest
The CWU will clearly seek to ensure that Royal Mail honours its commitments to
those currently in the DB scheme and ensures that all benefits and contributions up
to April 2018 will be protected. The real problem we face is how we stop current DB
members being transferred into a vastly inferior pension scheme that will deliver far
worse benefits in retirement and how we address the problems currently facing
existing DC members around inadequate contribution levels and outcomes.
As you’ll be aware, all members have now received a home mailing with a leaflet
setting out the CWU’s position on pensions and calling on all members to support
our campaign to deliver four key Pillars of Security - a pensions solution for all (in
both DB and DC schemes), a 35 hour shorter working week, extension of our current
agreements and legal protections and re-design of Royal Mail’s pipeline to deliver
long term growth in the business.
Thanks again for your email and for raising your questions directly with Royal Mail.
Deputy General Secretary (Postal)"
"Dear Terry, Thank you for your reply of 31st Jan. I have to say I am most disappointed in your reply. I appreciate what you say about the scale of loss for members. But I wonder whether you and the CWU have understood at all the points I have been making and have read in detail those points. In the year 2000 Royal Mail entered into a collective agreement with the CWU called the "Way forward". The agreement itself is on the CWU database and I also e mailed you a copy. In that agreement the CWU agreed to combine the postman grade with postman higher grade. For several years PHG [pay] was frozen, whilst postmen caught up and several changes were made to the way RM allocated leave etc. But the key point re Pensions was that RM agreed to keep shift allowances, for ex PHGs, pensionable indefinitely and on a reserved rights basis. They also agreed that night workers would receive full pensionable night allowance. This would be retained indefinitely as long as the duty holder remained on the same duty till 2002. Otherwise their pensionable night allowance would fall to half pensionable night allowance. All shift allowances across all shifts were, as said retained indefinitely Ie past 2018. This is a collective agreement that the CWU entered into on my behalf and at the very least it appears to be custom and practise. Please could you have a legal department look into this agreement and PHG protected pensionable allowances within it. Now onto ex Cashco members. Under the MTSF several of our members transferred to RM Chester MC. Whilst [they were] Cashco members, the CWU entered into a pay agreement with Cashco placing night allowance into basic pay. Night allowance no longer was a separate allowance. This was a new revised contract of employment. Under MTSF on transfer to the MC they retained the same contract and are currently paid the higher rate of basic pay, which includes night allowance incorporated into that basic pay. Therefore the personal illustrations for Ex Cashco staff should have included their night allowance as pensionable allowance as it now forms part of their basic pay. As for ex PHGs (including myself) all shift allowances under the way forward were protected indefinitely and on a reserved basis past 2018 and should also be included in their/mine personal illustrations. For Ex Cashco members the lower earnings deductions has nothing to do with combining night allowances into pensionable pay. I would hope my union would seek to enforce these collective agreements and the variation to our contract of employments. If you do not have a copy of the "way forward", you can find it under agreements on the CWU website or I can provide you with a copy . Ex Cashco members have a copy of their revised contract of employment which is protected under MTSF. Royal Mail are aware of the Way forward agreement and the protected pensionable allowances. As said I hope the CWU legal department will look into these agreements and seek to enforce our rights under them. I have been a member for nearly 35 years and this is the first time I have made such a request. If my Union cannot or will not carry out such a review, I will have to seek independent legal employment advice. The pensionable allowances I am seeking to be retained are worth £5000 per annum to me and other significant sums for other members. I would appreciate having the legal dept look into this and to furnish a reply to ex PHGs and ex Cashco members. Yours sincerely , Stephen Sinclair, CWU "