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Proposed CDC scheme

06 Feb 2018, 20:40

If this CDC scheme got agreement from government am I understanding correctly that your pension upon retiring would fluctuate from month to month? The variables being based on your age you retired, how much you paid in and for how long an employee paid and stock market performance for the month? Is this by computer algorithm?

Would a hit like today's FTSE fall be significant to one months payout if there was no rebound for weeks or months?

And isn't there at least in part a similarity to a Ponzi scheme/pyramid?

Sorry, lots of questions, but I'm struggling for answers as to why RM/CWU thinks this is a fair proposal going forward.


Proposed CDC scheme

06 Feb 2018, 21:03

TheRealDeal wrote:If this CDC scheme got agreement from government am I understanding correctly that your pension upon retiring would fluctuate from month to month? The variables being based on your age you retired, how much you paid in and for how long an employee paid and stock market performance for the month? Is this by computer algorithm?

Would a hit like today's FTSE fall be significant to one months payout if there was no rebound for weeks or months?

And isn't there at least in part a similarity to a Ponzi scheme/pyramid?

Sorry, lots of questions, but I'm struggling for answers as to why RM/CWU thinks this is a fair proposal going forward.


Your pension wouldn't fall, OR rise from month to month. What is being said, is that IF the returns from investment on the stock markets were to struggle, then your pension could fall for a period. There is mention somewhere in one of the articles of a drop in your pension. The short fall might be made up by members who are STILL paying into the scheme, when YOU have retired. There are issues surrounding this. The burden will fall on current members. As membership falls, due to RM shedding jobs, and or converting posts to part time, fewer people, and lower contributions from those people will mean future funding problems. A downturn in the markets for any real length of time would put the scheme and members own finances under greater pressure. If money is invested at a time like today's fall, in theory this is not so bad. More units / shares are bought for less cash. As the markets rise, those units / shares, rise in value. The opposite happens when cash is invested when prices are HIGH. LESS is bought for the same amount of cash. It is what is known as pound cost averaging. Look here : http://www.telegraph.co.uk/investing/fu ... ally-work/

Proposed CDC scheme

06 Feb 2018, 21:36

heapsy wrote:
TheRealDeal wrote:If this CDC scheme got agreement from government am I understanding correctly that your pension upon retiring would fluctuate from month to month? The variables being based on your age you retired, how much you paid in and for how long an employee paid and stock market performance for the month? Is this by computer algorithm?

Would a hit like today's FTSE fall be significant to one months payout if there was no rebound for weeks or months?

And isn't there at least in part a similarity to a Ponzi scheme/pyramid?

Sorry, lots of questions, but I'm struggling for answers as to why RM/CWU thinks this is a fair proposal going forward.


Your pension wouldn't fall, OR rise from month to month. What is being said, is that IF the returns from investment on the stock markets were to struggle, then your pension could fall for a period. There is mention somewhere in one of the articles of a drop in your pension. The short fall might be made up by members who are STILL paying into the scheme, when YOU have retired. There are issues surrounding this. The burden will fall on current members. As membership falls, due to RM shedding jobs, and or converting posts to part time, fewer people, and lower contributions from those people will mean future funding problems. A downturn in the markets for any real length of time would put the scheme and members own finances under greater pressure. If money is invested at a time like today's fall, in theory this is not so bad. More units / shares are bought for less cash. As the markets rise, those units / shares, rise in value. The opposite happens when cash is invested when prices are HIGH. LESS is bought for the same amount of cash. It is what is known as pound cost averaging. Look here : http://www.telegraph.co.uk/investing/fu ... ally-work/


Thanks very much for this insight, I have a clearer picture now of how the scheme works in practice. So monthly payments remain fixed.

I am not entirely sure I would want to join it though. I had an Equitable Life With Profits policy once that collapsed because not enough new members were paying in, luckily I was able to pull the plug before I lost anything..break even I think.

Proposed CDC scheme

06 Feb 2018, 23:23

heapsy wrote:
Your pension wouldn't fall....What is being said, is that IF the returns from investment on the stock markets were to struggle, then your pension could fall for a period.


It could well fall. My money is on it falling short of 'targets' medium to long term. Of course, if the 'targets' are set (artificially) low, then they shouldn't be too hard to attain - so I could be wrong in that respect. But you'll be stuffed in retirement if targets are set low, if you see what I mean. But hey,at least someone somewhere will be able to say that they've met targets.
Cost averaging doesn't really enter into it here - whats important about this deal is that you are assured of absolutely nothing in retirement - and you have little say in how your money is invested for you. You are, for want of a better way of putting it, over the barrel.

Forget about taking responsible action towards planning for your own retirement with this option. You really won't have much upon which to base your plans. Unless of course you have some kind of second sight into stock markets/bond markets/central bank monetary policy/future political climate/how your pension money is actually being invested on your behalf etc etc. Which no-one does. So - you have, effectively, been financially neutered - you (we) have been financially disenfranchised. Someone else is sovereign over what little wealth we have been able to amass.

Its rubbish. We've been had.

Proposed CDC scheme

07 Feb 2018, 00:43

It is such a complicated issue with pensions these days. Am I right in saying that older RM workers have at least three pensions? Two being frozen but still earning interest and one current that is about to close?

And assets from that current scheme would be transferred into the new improved DC scheme (under the original Apr 2017 offer)?

Either way we have a choice not to contribute into the CDC scheme?

Sorry the flyers we get on our benches don't give enough information and I find the pension tables in the agreement proposal a little hard to understand.

Proposed CDC scheme

07 Feb 2018, 11:08

The biggest issue for me is lack of choice. I looked at the Zurich website and tbh It doesn't offer much by way of number of funds, or the diversification in market or fund type. Very limited. Why RM insist on using such a company is beyond belief. They would have been far better using Hargreaves Lansdown, or a similar company. Far more choice. Through sheer weight of numbers they could have negotiated better deals on charges. A tutorial DVD and some explanatory notes would have given some valuable information as to building a pension pot. This option chosen by RM just isn't good enough. If it doesn't realise a big enough return will we be able to make a claim for mis selling? I think not.

Proposed CDC scheme

07 Feb 2018, 15:02

TheRealDeal wrote:It is such a complicated issue with pensions these days. Am I right in saying that older RM workers have at least three pensions? Two being frozen but still earning interest and one current that is about to close?

I have 30 years service and have my NRA60 which relates to service from staring in 1987 to 2010. Then I have my NRA65 which is from 2010 to 2018 and closure to future accrual.

And assets from that current scheme would be transferred into the new improved DC scheme (under the original Apr 2017 offer)?

Why would they be? The pensions that members of the RMPP have accrued over the years still need to be paid out.

Either way we have a choice not to contribute into the CDC scheme?

Yes. But the first choice is do we contribute to the DBCB scheme or not!

Proposed CDC scheme

07 Feb 2018, 15:02

heapsy wrote:The biggest issue for me is lack of choice. I looked at the Zurich website and tbh It doesn't offer much by way of number of funds, or the diversification in market or fund type. Very limited. Why RM insist on using such a company is beyond belief. They would have been far better using Hargreaves Lansdown, or a similar company. Far more choice. Through sheer weight of numbers they could have negotiated better deals on charges. A tutorial DVD and some explanatory notes would have given some valuable information as to building a pension pot. This option chosen by RM just isn't good enough. If it doesn't realise a big enough return will we be able to make a claim for mis selling? I think not.

We won’t get any investment choice with the CDC scheme – it’s a collective scheme, so all our money goes into one pot!

And nobody has mentioned as far as I know, who will be managing the funds. Although, in practice it will probably be several as is the case with the RMPP.

Proposed CDC scheme

07 Feb 2018, 15:24

RobertT wrote:
heapsy wrote:The biggest issue for me is lack of choice. I looked at the Zurich website and tbh It doesn't offer much by way of number of funds, or the diversification in market or fund type. Very limited. Why RM insist on using such a company is beyond belief. They would have been far better using Hargreaves Lansdown, or a similar company. Far more choice. Through sheer weight of numbers they could have negotiated better deals on charges. A tutorial DVD and some explanatory notes would have given some valuable information as to building a pension pot. This option chosen by RM just isn't good enough. If it doesn't realise a big enough return will we be able to make a claim for mis selling? I think not.

We won’t get any investment choice with the CDC scheme – it’s a collective scheme, so all our money goes into one pot!

And nobody has mentioned as far as I know, who will be managing the funds. Although, in practice it will probably be several as is the case with the RMPP.

Is it likely my avcs are going to get frozen again as I am sure I had one with another company before we went to Zurich?

Proposed CDC scheme

07 Feb 2018, 15:25

RobertT wrote:
heapsy wrote:The biggest issue for me is lack of choice. I looked at the Zurich website and tbh It doesn't offer much by way of number of funds, or the diversification in market or fund type. Very limited. Why RM insist on using such a company is beyond belief. They would have been far better using Hargreaves Lansdown, or a similar company. Far more choice. Through sheer weight of numbers they could have negotiated better deals on charges. A tutorial DVD and some explanatory notes would have given some valuable information as to building a pension pot. This option chosen by RM just isn't good enough. If it doesn't realise a big enough return will we be able to make a claim for mis selling? I think not.

We won’t get any investment choice with the CDC scheme – it’s a collective scheme, so all our money goes into one pot!

And nobody has mentioned as far as I know, who will be managing the funds. Although, in practice it will probably be several as is the case with the RMPP.

Is it likely my avcs are going to get frozen again as I am sure I had one with another company before we went to Zurich?

Proposed CDC scheme

07 Feb 2018, 15:42

cloherty1976 wrote:Is it likely my avcs are going to get frozen again as I am sure I had one with another company before we went to Zurich?

We don’t yet know what’s happening with AVC’s, either in respect of the transitional DBCB scheme from 1st April or for the CDC scheme if/when it gets implemented.

Zurich took over the AVC’s in 2010 and they were transferred automatically from the previous providers at the time. Unless you had ‘with profits’ funds with Aviva, Equitable Life or Standard Life, in which case you had to expressly asked them to be transferred.

Proposed CDC scheme

07 Feb 2018, 17:09

TheRealDeal wrote:
heapsy wrote:
TheRealDeal wrote:If this CDC scheme got agreement from government am I understanding correctly that your pension upon retiring would fluctuate from month to month? The variables being based on your age you retired, how much you paid in and for how long an employee paid and stock market performance for the month? Is this by computer algorithm?

Would a hit like today's FTSE fall be significant to one months payout if there was no rebound for weeks or months?

And isn't there at least in part a similarity to a Ponzi scheme/pyramid?

Sorry, lots of questions, but I'm struggling for answers as to why RM/CWU thinks this is a fair proposal going forward.


Your pension wouldn't fall, OR rise from month to month. What is being said, is that IF the returns from investment on the stock markets were to struggle, then your pension could fall for a period. There is mention somewhere in one of the articles of a drop in your pension. The short fall might be made up by members who are STILL paying into the scheme, when YOU have retired. There are issues surrounding this. The burden will fall on current members. As membership falls, due to RM shedding jobs, and or converting posts to part time, fewer people, and lower contributions from those people will mean future funding problems. A downturn in the markets for any real length of time would put the scheme and members own finances under greater pressure. If money is invested at a time like today's fall, in theory this is not so bad. More units / shares are bought for less cash. As the markets rise, those units / shares, rise in value. The opposite happens when cash is invested when prices are HIGH. LESS is bought for the same amount of cash. It is what is known as pound cost averaging. Look here : http://www.telegraph.co.uk/investing/fu ... ally-work/


Thanks very much for this insight, I have a clearer picture now of how the scheme works in practice. So monthly payments remain fixed.

I am not entirely sure I would want to join it though. I had an Equitable Life With Profits policy once that collapsed because not enough new members were paying in, luckily I was able to pull the plug before I lost anything..break even I think.


To me this is key - how can a pension scheme over the long term - paying out to many thousands of members continue to be viable with many thousands leaving the company...with many of those left being/becoming part-time.

Also as i understand it we would take all/most of the risk and NOT RM

I also want some choice and control of where i invest MY money.

Proposed CDC scheme

07 Feb 2018, 17:13

RobertT wrote:
cloherty1976 wrote:Is it likely my avcs are going to get frozen again as I am sure I had one with another company before we went to Zurich?

We don’t yet know what’s happening with AVC’s, either in respect of the transitional DBCB scheme from 1st April or for the CDC scheme if/when it gets implemented.

Zurich took over the AVC’s in 2010 and they were transferred automatically from the previous providers at the time. Unless you had ‘with profits’ funds with Aviva, Equitable Life or Standard Life, in which case you had to expressly asked them to be transferred.

Thanks for that I think I have standard life with profits that's why it's frozen. Can you also explain when or if we can pay in this extra 1% matched by the company and if you think this is a good deal to?

Proposed CDC scheme

07 Feb 2018, 17:54

cloherty1976 wrote:Thanks for that I think I have standard life with profits that's why it's frozen. Can you also explain when or if we can pay in this extra 1% matched by the company and if you think this is a good deal to?

The CDC scheme will only be implemented if the necessary legislation is forthcoming, which could be months or years away or maybe not at all, so it’s a bit premature to talk about the extra 1% contribution at the moment.
But going by Hillary Salts video explanation that extra 2% could effectively pay for you to take the pension at 65 rather than 67 and get the same amount as you would have done at 67 without the extra contributions.

In my opinion, if you think the CDC scheme is worth joining then it also makes sense to pay that extra amount.

Proposed CDC scheme

07 Feb 2018, 18:31

On this new pension scheme would I still be able to take my pension at 60 or would it be 67.

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