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Help with pension

08 Mar 2019, 11:45

Bit confused as to which pension scheme I'm in & how much Royal Mail are contributing. My wage slip says "PSE Adj RMPP DBCBS C". Thanks.

Help with pension

08 Mar 2019, 12:19

I phoned the pension help line up but still confused. They told me everybody who started with Royal Mail before 2008 is in the DBCBS as a temporary measure until the pensions limbo is sorted out. So, at the moment Royal Mail are contributing 13.6% of my pay and my wage slip is showing a personal deduction of 6% from me but nothing is showing regarding Royal Mails contribution. Where this money is being invested I have no idea.
Will Royal Mails contribution level be staying the same if and when the governments legislation is sorted out or changing to 10% ?
The reason I ask is the letter I have just read online about choosing which pension you want says, and I quote "If you don’t tell Royal Mail what you want to do by 19th March, from 1st April this year, you’ll automatically start saving 6% of your pensionable pay into the Royal Mail Defined Contribution Plan. This is the plan you’re saving into at the moment. Royal Mail will add another 10% to that. In the past they would have added 9%."
It says 10% but the woman on the pensions helpline said 13.6%. Is this just because of the limbo situation ?
Aren't the abbreviations for the plan I haven't opted out of "RMDCP" though ? And, as I haven't opted out why is my wage slip saying I am in the cash plan with the abbreviation DBCBS ? Again, is this just a temporary thing. The letter I have read online saying what will happen and what has happened appear to be different. Confused as hell :crazy:

Help with pension

08 Mar 2019, 15:19

You are in the Royal Mail Pension Plan(RMPP) which means you began your RM employment and joined the pension before 1st April 2008.

The RMPP closed to future accrual on 31st March 2018, so you are no longer building up any more pension. But what you've already built up is still going up with wages(pre 2008) and by inflation(post 2008).

You are currently paying into the transitional Defined Benefit Cash Balance Scheme(DBCBS), which will provide some or all of your tax free lump sum when you taker your RMPP pension/s. That money is being invested as a whole in a number of different investments, but I don't think it's been announced exactly where.
We won't find out how much our individual DBCBS pots are worth until the next annual statement, which we'll probably get around September.

RM's contribution into the DBCBS is 13.6% and ours is 6%, and those rates are expected to stay the same when the CDC pension is introduced(pending legislation).

The Royal Mail Defined Contribution Plan(RMDCP) will have 3 types of member:

Those that joined RM after 1st April 2008.
Those that opted out of the RMPP and have since joined the RMDCP(you can't opt back into the RMPP).
Those that have taken their RMPP pensions and are still working for RM and have since joined the RMDCP.

You are a member of the RMPP and paying into the DBCBS. The RMDCP is a totally different scheme which you're not a member of!

More info on your RMPP benefits can be found on the RMPP website.
More details on the transitional DBCBS and CDC scheme can be found on My Royal Mail.
Last edited by RobertT on 08 Mar 2019, 16:54, edited 1 time in total.

Help with pension

08 Mar 2019, 15:44

SO DOES THAT MEAN THE DBCBS WONT ACTUALLY PAY A PENSION BUT ONLY A LUMP SUM

Help with pension

08 Mar 2019, 15:49

Thanks very much for that concise reply. 6 months ago I started to pay into a few of the optional Zurich AVC's, and I was getting a bit concerned that somehow & inadvertently I had opted out of the new pension scheme in the process. I was aware like you say that once out, you can't go back in and so was a bit worried.
I presume there are advantages and disadvantages to both schemes but because I don't yet understand fully the differences, opting out of something permanently would probably prove to be a huge mistake I'm sure.

Need to properly wrap my head around these pensions though.

Help with pension

08 Mar 2019, 15:55

Good point Sputters. Hopefully Robert will enlighten us. It probably means you have to decide what to do with the money yourself ie to either buy an annuity, or draw down the money gradually with an option to take 25% tax free. But hopefully we will get an answer. And also would be useful to know that since this is a transitional scheme, will it be classed as yet another separate pension to the RMPP one, meaning that for people who have been working for Royal Mail 15 years plus, they could have 4 different pensions to "cash in", the "final salary" one, the "averaged salary" one, this transitional scheme, and the new collective one as and when the government allows it (sorry for the slang terminology of the pension descriptions, not as clued up as Robert). Thanks.

Help with pension

08 Mar 2019, 16:06

Sputters2017 wrote:SO DOES THAT MEAN THE DBCBS WONT ACTUALLY PAY A PENSION BUT ONLY A LUMP SUM

Yes!

Most employee members of the RMPP are in section C, which doesn't provide a lump sum as standard, but they have the opportunity to give up some pension to get a lump sum.

The DBCBS will provide some or all of that lump sum, depending on how long it takes for the CDC scheme to be set up, and so how long the DBCBS is in operation for.

The DBCBS is to be used in conjunction with your NRA60 and/or NRA65 benefits. It is not a separate scheme in itself. Unless you're an ex-DC member of the RMPP(section F), but I won't go into that now.

More info can be found in your plan guide, which you were sent a paper copy of a few months ago and is also available to view on the RMPP website.

Help with pension

08 Mar 2019, 16:10

posteee wrote:Thanks very much for that concise reply. 6 months ago I started to pay into a few of the optional Zurich AVC's, and I was getting a bit concerned that somehow & inadvertently I had opted out of the new pension scheme in the process. I was aware like you say that once out, you can't go back in and so was a bit worried.
I presume there are advantages and disadvantages to both schemes but because I don't yet understand fully the differences, opting out of something permanently would probably prove to be a huge mistake I'm sure.

Need to properly wrap my head around these pensions though.

Paying AVC's is a good move and will provide a lump sum along with your DBCBS pot. See page 12 of your plan guide for more info.

There have been posties who have opted out of the RMPP while they were perhaps younger and not thinking about old age, and very much regretted it once they got a bit older and wiser.

The RMPP is a defined benefit(DB) pension, so it's based on how much you earn and your length of service. Plus it's index linked, so it goes up by inflation each year. General DB info.

The RMDCP is a defined contribution(DC) pension, which is based purely on how much is going in and how well the investments perform. When you retire you then have different options with the money in your pot. General DC info

It'll always be a personal decision to some degree, but in general terms DB is usually always better than DC.

Help with pension

08 Mar 2019, 16:39

Thanks for the reply. I am lucky as i have been a postman since 1984 and been in all of rm pension schemes starting with the posss . I feel sorry for today's new starters who by the sounds of it will never have a traditional pension with rm. as it seems rm no longer do a pension
Last edited by Sputters2017 on 08 Mar 2019, 16:54, edited 1 time in total.

Help with pension

08 Mar 2019, 16:53

Sputters2017 wrote:Thanks for the reply. I am lucky as i have been a postman since 1984 and been in all of rm pension schemes starting with the posss . I feel sorry for today's new starters who by the sounds of it will never have a traditional pension with rm

Glad to help! :thumbup

I've been with RM since 1987 and missed out on section B(formerly POSSS) by a few months, and so was put in section C(formerly POPS).

The DB scheme closed to new entrants in 2008, so a good chunk of the current workforce will be in the DC scheme.
And I suspect that quite a few are only paying the minimum amounts or have even opted out completely due to affordability or apathy, and so have very little or no RM pension at all.

The proposed CDC scheme will attempt to provide benefits similar to DB, but there won't be the same guarantees.

Help with pension

08 Mar 2019, 17:35

I'm quite a long way behind you both as I only started with RM in 2004, and only managed to get full time a couple of years back (although overtime always used to go towards pension too I believe). Anyway I received my pension illustration last year and was a bit taken aback that my projected pension that I had built up thus far over 14 years amounted to the princely sum of £300 a month (I can't remember if this was at 60 or 65 age). Since I now live on my own at 43 after a divorce (isn't life wonderful), I thought if anything happens to me over the next 10-15 years either employment or health wise I could be well and truly snookered financially.
So I phoned the pensions team who advised me although I couldn't pay any more in, I could use the AVC's. So with the assistance of the tax & NI savings available through PSE I am now saving an extra £50 a week towards my pension - spread across 5 of the Zurich funds (£18 into the growth fund, £8 into cautious, £8 into Sharia, £8 into ethical, £8 into Balanced). I also have the £2.88 bonus lifestyle too which I have had for a while. I'm also paying £100 a month for the Royal Mail shares but beginning to wonder why. I cashed most of my other shares in when my wife threw me out over 2 and a half years ago as was still part time and completely skint. Paid tax on them but had no choice at the time and I've since been fortunate enough to get another mortgage.

So, all in all I'm sacrificing £73 a week but due to PSE it actually only costs me £50 a week. Life has been difficult and feel I need to put as much away as possible. Hopefully can keep this up for 20 years or so but I might stop the shares and instead add more to the AVC, as was viewing it all as a pension fund really but clearly the RM shares are risky.

At £300 a month I may as well be homeless and alarm bells started to ring when it sunk in. Just hope I'm doing enough in time. Over a period of 20 years, if I can keep saving £73 a week I should have a pot of £75920 (cash value before gains or losses). Slightly concerning still though is the fact that annuity rates are only about 5%, so even with that amount the income would only be about £3800 per year (again before inflation and compound interest etc). Still that's about another £300 a month which would more or less double my pension and then of course I will have the RMPP which should mean as long as I can stay alive and employed I should be more than ok.

I don't want to sleepwalk into a nightmare scenario where I retire and can't survive. I know it's a long way off but I have 2 kids and want to be able to support them later in life too. 68 for state pension is a frightening prospect without nothing else.

Help with pension

08 Mar 2019, 17:47

Postee glad you are getting your life back on track . Don't forget that you will have the state pension to live on as well .so if you can clear your mortgage by the time you retire things wont be so bad

Help with pension

08 Mar 2019, 18:08

Yes thanks Sputters. I worry with all the future changes & automation (work in a mail centre) that remaining employed until 67-68 for state retirement could be a challenge. So I'm looking at this as a 15-20 year plan where if the worst comes to the worst at anything between age 55-65 I have some options. Took mortgage over 25 years taking me right up to full retirement to pay off, and people have suggested instead of paying more into my pension I pay down my mortgage faster. But my thinking is with a pension pot thus far valued at £300 a month, it doesn't matter whether my mortgage is paid off or not because with that income I wouldn't be able to live in it anyway even without a mortgage ! So with interest rates low, and the PSE advantages of tax & NI savings I'm going down the long term savings route. Have no way to afford to save anything else now though so good job the house is in a reasonable state of repair, and the car is running ok. Just going to grit my teeth and keep going forward with my plan I think. Will be nice to see a statement after 12 months from my AVC to help motivate me to keep going.

Help with pension

08 Mar 2019, 18:15

Personally I started paying AVC's about 25 years ago and I've also got a personal pension which together have turned out to be a great investment. Infact they've made the difference between having to work until 65 if not 67(my state pension age) and being able to go at 55.
I've just got to keep the faith for another 4 years and that should be me done with RM and hopefully work altogether. :pray

So I would always advise taking your pension/retirement seriously from an early age, and save as much as you can afford to take advantage of the tax breaks and any employer contributions. And don't be too conservative with your investment choices, especially if you have many years to retirement.

Thinking about your pension might not seem the done thing when you're younger, but starting early really does pay off! But whenever you start, something is better than nothing!

And always try and increase your payments along with pay rises/inflation if possible.

If you don't already know, you can check your state pension entitlement to find out how much you're going to get from that. If you qualify for the full amount, that's another £164 per week in today money. See here for more info. I would suggest signing up for an online account rather than by phone or post, that way you can check anytime you want.

You can also sign up for an online account with Zurich to check your AVC performance.

Help with pension

08 Mar 2019, 18:49

You got me thinking now Robert. I have another 8 years before retirement is it worth paying more into my Avc I pay £35 a week . If so how do I increase my payments . Thanks for all your advice it's very much appreciated by everyone

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