http://www.royalmailpensionplan.co.uk/s ... 17.pdf.pdfRoyal Mail Pension Plan (Royal Mail Sections): Changes Proposed By Royal Mail
I wrote to you in January when Royal Mail began a consultation about its sections of the Royal Mail Pension Plan (the Plan). Following the consultation, Royal Mail proposed to the Trustee Board that Sections B and C of the Plan be closed from the end of March 2018. The Trustee has taken independent advice regarding the proposed closure and has been considering the options available to the Plan very carefully.
The Trustee has now agreed to Royal Mail’s request to close Sections B and C of the Plan. Below I explain how and why we reached this difficult decision.
Please note: The closure will only affect Royal Mail employee members of the Plan. If you have left employment or opted out of the Plan, or your Age65 benefits are already being paid, then your benefits will not be affected and this letter is just for your information.Key points
• The closure will happen at the end of March 2018.
• The benefits you have built up already, and which are protected by law, are secure and are not being reduced.
• The Trustee’s decision was not taken lightly and rigorous independent advice was taken throughout the process of considering the proposal.
• The Trustee concluded that agreeing to Royal Mail’s proposal to close Sections B and C of the Plan was the best outcome for the membership as a whole.Who is the Trustee and what is its role?
The Plan’s Trustee is a company called ‘Royal Mail Pensions Trustees Limited’. This company is legally responsible for ensuring that the Plan is run properly.
There are nine directors on the Board. One is an independent Chair appointed by Royal Mail, but with union agreement, and four are nominated by the membership (three through a CWU process and one through a Unite/CMA process). The remaining four are nominated by Royal Mail, of whom two are independent trustees, and one is chosen by Post Office.
No matter who they are nominated by, each trustee director has the same legal responsibilities to all members of the Plan.
Royal Mail proposed to make changes to the rules in order to close Sections B and C of the Plan and to make other changes to the way the benefits you will have built up to the end of March 2018 will increase in future. Changes to the Plan may only be made if the Trustee also agrees to them.The Trustee’s considerations
In deciding whether to agree to the changes proposed by Royal Mail, the Trustee examined and considered various issues, taking independent professional advice. These are some key points that the Trustee considered.Ensuring that the benefits which members had already built up in the Plan would be protected
The Trustee checked with its advisers that pension benefits you have already built up and which are protected by legislation are not reduced by the proposals. The benefits you have built up, plus any increases added, will be paid to you when you reach age 60 and 65.
Royal Mail’s proposals include a change to the Plan’s rules which, the Government has confirmed, would ensure that benefits held in the Royal Mail Statutory Pension Scheme (RMSPS) continue to increase in line with RPI whilst members remain in Royal Mail employment (maintaining the position which currently applies while the Plan is open). The RMSPS is the scheme set up by Government in 2012 which holds all your benefits built up before 1 April 2012.Royal Mail’s reasons for proposing that Sections B and C of the Plan be closed, including:
• The on-going affordability of the current benefits to Royal Mail.
• A concern that benefits already built up should be secure.
The Trustee’s independent advisers were able to examine the affordability of the Plan for Royal Mail and confirmed that the proposal was justifiable on business grounds.
The Trustee’s advisers found that if the Plan remained open and benefits continued to build up there was a risk that the Plan would be unable to pay all the benefits that have been built up by the members once the current surplus is used up. The advice was that the Plan should not rely on Royal Mail being able to afford to provide any additional funding in future.The best outcome for all members
The role of the Trustee is to consider the interests of all the members of the Royal Mail sections of the Plan – that is to say employee members, pensioners and deferred members (those who have left employment but not yet taken their benefits). Our first concern is the protection of the benefits that all members have already built up. When looked at in the context of highly uncertain future funding from Royal Mail, if the Plan remained open and ran into deficit, this could mean benefits being reduced. The Trustee Board’s view was that the proposal to close Sections B and C of the Plan was the best outcome for the membership of those sections as a whole in these difficult circumstances. The Trustee has therefore agreed to Royal Mail’s request.Conclusion
The Trustee has followed a full and very detailed process in deliberating over the proposed changes. I fully appreciate how much members value their Plan benefits. This was a difficult decision for the Board to take, but it was taken, reluctantly, after having heard arguments from all sides and weighing up all the relevant issues.
If you have any questions please contact the Pensions Service Centre. Their details are as follows:
In writing: Pensions Service Centre, PO Box 5863, Pond Street, Sheffield, S98 6AB
Pensions Helpline: 0114 241 4545 or Postline: 5456 4545
or visit: http://www.royalmailpensionplan.co.uk