LTB:Postal Policy Forum 22nd, 23rd March 2016 : The Future of Royal Mail, Pay and Pensions

[POSTMAN]

POSTMAN EDIT:Apolgies this was sent to me in a weird format I think I've managed to dissect it and to post it up properly


Postal Policy Forum
22nd, 23rd March 2016

No. 104/16 Ref: 24210 Date: 19th February 2016
To: Branches with POSTAL Members



Dear Colleague,

Postal Policy Forum – Tuesday 22nd and Wednesday 23rd March 2016 - The Future of Royal Mail, Pay and Pensions

Venue: Queen Elizabeth II Conference Centre, Broadway Sanctuary, Westminster, London SW1P 3EE

Further to LTB(s) 85/16 and 94/16 issued on the 10th and 15th February 2016 respectively, please find attached for the information and attention of Branches the following documentation:

Policy Document – The Future of Royal Mail, Pay and Pensions

The document is broken down into four sections with the associated recommendations that will be the focus of the debates at the Forum and are as follows:

Section 1 : Current Agreements
Section 2 : Future Design
Section 3 : Pay, Hours and Leave
Section 4: Pensions

Provisional Timetable

A final timetable will be sent out with the amendments.

Policy Forum Day 1: Tuesday 22nd March 2016 (1300-1700)

1200-1300 - Registration
Introduction - The Future of Royal Mail, Pay and Pensions
Section 1 - Current Agreements - Recommendation 1 & 2
Section 2 - Future Design - Recommendations 3, 4 & 5


Policy Forum Day 2: Wednesday 23rd March 2016 (0930-1500)

Section 2 - Future Design - Recommendations 3, 4 & 5
Lunch 1200-1300
Section 3 – Pay, Hours and Leave - Recommendation 6
Section 4 – Pensions - Recommendation 7



Branches and Business Coordinating Committees are entitled to submit one amendment per recommendation using the attached forms. Amendments can be emailed to HYPERLINK "mailto:postalpolicyforum@cwu.org" postalpolicyforum@cwu.org. Please note that no amendments will be accepted if sent to any other email address, similarly, no amendments submitted by post will be accepted if sent to any other postal address other than the address on the form.

Also attached to this LTB is:

Letter from the Postal Executive Chair and Vice Chair
Registration Form
Credentials and Voting Procedure
Policy Forum Guidelines
Amendment Forms

Royal Mail Group has been informed of the Policy Forum.

Travel and subsistence costs associated with attendance at the Policy Forum will be in line with the instructions and advice issued in LTB 506/04.

Any enquiries on the content of this LTB and the Policy Document should be directed to the DGS(P) Department.

Yours sincerely, yours sincerely,


Terry Pullinger Jane Loftus
Deputy General Secretary (Postal) Postal Executive Chair


The Future of Royal Mail
Introduction
Our Agreements and legal protections have provided an excellent foundation from which to develop a successful business based on a genuine mutual interest culture and still face down our significant challenges – but that work is far from complete.

Our members work for a unique business with an amazing heritage, a business that touches every single address in this country six days a week. One in every 180 people in the UK work for Royal Mail and it is the sixth biggest contributor to the national economy. Not only does the company have a huge social responsibility (set out in statute) but it also plays its part as a major contributor to charities and supporting the wider UK society in which it operates.

This year Royal Mail celebrates 500 years of existence and it is quite incredible that this powerful engine of civilisation, this great invention is still relevant today, some 500 years since its inception. By understanding and feeling connected with our past we can better visualise our future.

Over the years Royal Mail has gone through different periods of change whilst still respecting its heritage and retaining its relationship with the people of this country. Its most recent history has seen it navigate a course through public ownership to privatisation, through liberalisation, increased competition and regulatory interference, greater automation and the radical change in customer trends through the evolution of home shopping.

While the changes witnessed since 2010 have been the most dramatic in respect of ownership and pace of change, its subsequent evolution has been based upon the mutual recognition that the business’ success and the job security of its employees will only be secured if the management and the union are aligned on future direction.

The Agenda for Growth Agreement struck at the time of privatisation in 2013 provided the union with a solid platform to deal with the sharper competitive realities of Royal Mail post-privatisation. Over recent years the company’s performance has been impressive and those opinion formers who considered Royal Mail too big and cumbersome to respond without regulatory intervention have been proven wrong - as the stats speak for themselves:

Royal Mail’s total revenues have grown by nearly £900m since 2010 to stand at £9.4 billion.

Royal Mail’s operating profits (before tax and transformation costs) have also risen sharply from £210m in 2010 to £611m in 2015.

So whatever its critics, private investors and the Regulator may say about Royal Mail’s efficiencies, it remains a massive company, making billions in revenues and millions in profits, paying out dividends to shareholders of £413m thus far.

However there is a blatant truth emerging around the company’s relentless plans to cut costs, their immediate and planned strategy and their views on the future for deliveries (and therefore for every part of Royal Mail) which are raising some serious questions about what this could mean for our members’ future jobs, workload and reward.

The CWU and our members now face a very clear choice: do we just continue as we are and allow our Agreements to run out, keep co-operating with change when we do not know what the final picture looks like; or do we reposition and set out our own vision for both our members and the future of the operation.

We all know that the status quo is not working, that the current direction of travel will continue to move away from the spirit and intent of our Agreements (and so threaten industrial stability) and that we need to address the situation.

We completely understand and share people’s concerns about being sucked into a world of growing insecurity around jobs and standard of living, limited and un-sociable duty patterns, a de-humanized working environment where every second of an individual’s working day is monitored and where institutionalized bullying is either perceived or experienced.

Decisions are being taken in respect of future investment without appropriate consultation, investments that would drive potential fait accompli operational design change. This and the incessant push of un-agreed efficiency measures are seriously testing our union’s democratic consent and future cooperation.

The union now needs to respond to the growing lack of confidence in the mutual interest aspects of our Agreements and ensure the Agreements themselves are being adhered to. Royal Mail needs redesigning, we need to push the growth agenda and seek a more diversified product portfolio, insist that the commitments to enhanced quality of working life and standard of living are honored and move Royal Mail to the forefront of the information, convenience and delivery revolution.

A consensus vision for the future of this industry 5 to 10 years’ out, with ensured protections in place to give us confidence through that period and which reaffirms the mutual interest nature of future design must be our aim.

The positions we choose to take may well be perceived as high risk given the current climate and the potential threatening trinity of shareholders, Regulator and Government. But we must be bold and recognise that whatever policy we adopt it needs to be understood that negotiations will be very difficult, we will not get everything we want, it will take time and patience, as well as the need to up our game in communicating, organising and getting the backing of our members. We need to secure a settlement with Royal Mail that will transform, for the better, the future for our members and this excellent institution.

Of course, there are many defeatists who say this is impossible but we have to stand up for our genuine interests, build on the BT Agreement 2010 and subsequent Agreements and ensure that when we make a deal we stick to it and when management break it we defend it.
This business is still in excellent shape and a master of its own destiny but if the Royal Mail wants a future working with the CWU then they will have to respond to our concerns. So let us bring the same determination, imagination and tenacity to the current situation as we have applied in the past and ensure that a successful future for Royal Mail does not come at the expense of our members.

This document has been produced to help determine our strategy and policy going forward, building on the earlier In-Committee Postal Executive discussions. To help structure the debate the document is divided into four sections each with a number of related policy recommendations:

Section 1 sets out the key provisions and joint commitments contained in all our current Agreements with Royal Mail;

Section 2 sets out the issues around Future Design, OMP/Single Wave and Production Control.

Section 3 sets out the union’s key pay policies with some likely cost estimates to help determine our priorities and claim for April 2016; and

Section 4 sets out the latest position on pensions.




Terry Pullinger
Deputy General Secretary (Postal)

Ray Ellis
Assistant Secretary

Andy Furey
Assistant Secretary

Bob Gibson
Assistant Secretary

Davie Robertson
Assistant Secretary


On behalf of the Postal Executive Committee










SECTION 1: CURRENT AGREEMENTS

The Agreements the CWU has secured with Royal Mail since 2010 have not only reflected the union’s considerable and continued industrial and bargaining strength but also provided a graphic example of the benefits of CWU membership – better pay, greater job security and a series of important provisions backed by legal protections and collective agreements built on “consensual change” and a “mutual interest culture”.

In preparing to develop our policy going forward and secure a new settlement for members that enforces and extends our existing protections, it is worth revisiting the content and application of our current Agreements.

Business Transformation 2010 and Beyond Agreement

In respect of the ‘Business Transformation 2010 and Beyond Agreement’ it is worth recalling some of the purpose and scope. While it’s important to understand the whole agreement in full, we have drawn out some key points which stand out given our current situation and the issues we face.

The Agreement acknowledged the need to radically transform every aspect of Royal Mail’s operations in order to survive and prosper in a market where our traditional business was being overtaken by modern methods of communication and where competition, pension costs and volume decline were recognised as massive challenges for the company.

In respect of modernisation and shared vision, the Agreement stated that: “Royal Mail will develop a greater and more dynamic range of products and services”; there would be a reduction in overall employee numbers; walk sequencing would be deployed; and there would be a rationalisation of Mail Centres and RDC’s, and World Class methods, working practices and productivity.

The Agreement also carried a joint commitment to ensure that whatever change was introduced this would be on the basis of “more rewarding employment that would set the benchmark for competitors to follow”, with better long-term prospects, a workforce that feels valued and genuinely involved, ongoing improvements to their terms and conditions and greater long-term job security.

While the deal in 2013 delivered above-inflation pay rises to 2015, it is debatable whether confidence in long-term job security has been sustained and rather than setting the benchmark for competitors to follow it would seem that the business appear to be more and more encouraged to follow them.

Although the agreement recognised the business would be a highly efficient and automated company, it also committed to the very important concepts of providing end-to-end postal and distribution services. It also said it would be “proud of its social responsibilities, retaining its public service ethos in a modern dynamic setting” and in the future would develop a “culture of mutual interest”.

Transforming relationships to provide the CWU with genuine engagement at the development stage of key business policy via transparency and good information share is a consistent message through all our Agreements. However, given recent developments, genuine transparency of the business strategy and its development is clearly now in question.

Interestingly, the 2010 Agreement also acknowledged that National Agreements should be consistently deployed at local level - an issue clearly of topical concern especially in respect of delivery.

The BT Agreement also raises the issue of the workplan (a crucial issue in respect of the current discussions around single wave and OMP) and the introduction of new machinery/technology facilitating a modern pipeline aligned to a new six-day workplan. It also made clear that the workplan and any associated changes will be subject to joint national review.

Another key issue to remember is that the Agreement included a commitment that mail arrivals would support and enable the agreed functional attendance patterns at local level. However, it is becoming clear to us all that the effects of automation, the managerial appetite for savings and efficiencies (driven in part by regulatory pressure) and the potential transformation to the workplan that would result, will not support the commitment on mail arrivals.

The 2010 Agreement also promoted a workplan that provides for improvements in quality of service and the capacity for new products and services, but in our view the emerging managerial policy, rather than opening up the capacity for new products and services, is actually constraining the ability of the business to offer new services alongside our core operations. Introducing new products outside of, or unconnected to our core operations will only tend to increase management’s desire to introduce new alternative revenue streams based on a cheaper and more flexible employment model.

Equally, the agreed maintenance of the 75% full-time/25% part-time mix, committed to in the 2010 Agreement, has and will continue to be challenged if what we assume is the managerial plan is allowed to prevail.

The Agreement stated that letter delivery completion times will be up to 15:00 hours for residential areas and up to 16:00 hours for rural, but what it does not state is the arrival times into the Delivery Office and we believe this is the crucial point of debate in respect of the extension of automation, a new workplan and the achievement of our agreed commitments.

At the time of writing this document we are challenging the development of a resourcing strategy in Royal Mail which is driving a ‘core and peripheral’ resourcing model (i.e. core directly employed and peripheral staffed by agency and casual).

We are seeing a pattern which we perceive as policy for all full-time vacancies to be replaced only by part-time employees, maximising the flexibility between part-time and agency/casual employment. Clearly we need to address this issue and reaffirm the application of our Agreements and full-time/part-time ratios.

Managing the Surplus Framework (MTSF) Agreement

Originally negotiated in 2002, MTSF is the key Agreement covering redeployment, redundancy and pay protection terms and processes. Pay protection terms were extended to all business driven changes in 2003 and the Agreement has subsequently been periodically updated in light of legal and tax changes. MTSF has ensured that in a period of massive change in Royal Mail Group no one in CWU represented grades has been made compulsorily redundant and pensionable earnings have been protected to an extent virtually unparalleled in UK industry. Maintaining and extending the protections afforded by MTSF remains a key priority for the union.

Job Security Agreement

The Job Security Agreement was negotiated in 2012. Key elements of the Agreement are incorporated in the legal protections in section 3 of Agenda for Growth. These are:

Employees will be employed on permanent contracts, except where there is a genuine short term need identified by the employer after consultation with the union.

Agency workers are intended to cover short term or unforeseen resourcing needs, expected to last for periods of no more than 12 weeks, which can’t be covered by offering additional hours to existing employees whilst maintaining quality of service.

The overall resourcing model continues to be based predominantly on full time employment.

The level of part time employees contracted hours will be reviewed by the employer and the CWU locally on a six monthly basis. Where appropriate, an increase of contracted hours can be offered to reflect the hours actually worked and planned.

It is evident that in many parts of the business some or all of these binding commitments have not been adhered to. A key element of the JSA is paragraph 3.5: “It is essential that the ongoing local resourcing requirements are subject to regular consultation between Royal Mail and CWU, as part of the mandatory weekly resourcing meetings”. It is evident that in many (perhaps most) units, regular resourcing meetings are not taking place.

A key task for the union is to ensure that proper consultation, in line with the terms of the JSA, is taking place at the appropriate level and where we believe management are failing to adhere to the JSA and Agenda for Growth terms, we use the IR Framework disagreement procedure to challenge this.

The Agenda for Growth, Stability and Long Term Success (2014)

The Growth and Stability Agreement not only provided key protections around future jobs, pay and pensions, it positioned the union to oppose any break up of Royal Mail and introduce a two-tier workforce and strengthened the CWU’s influence industrially by providing greater input at every level of the business in the overall direction of the company and the future growth agenda. It also included important commitments to deliver industrial stability via new governance arrangements, re-launching the IR Framework, introducing new processes to strengthen dispute resolution and reviewing company culture and employee engagement.

The Agreement acknowledges that we had established a “solid foundation to build a successful and sustainable business”, one that could deliver an agenda for growth with positive alternatives to managing decline. It is important to note that the Agreement was also building on the shared vision of modernisation contained in the 2010 BT Agreement making all the associated commitments still relevant, especially in respect of developing new business strategies.

It is again worth noting the emphasis made to the rollout of automation, new technology and handheld technology. In respect of responding to efficiency, it stated that we would build a climate of sustainable trust with a ‘can-do’ culture based on the involvement of employees in decision making and consensual change in the workplace. However this has been undermined by decisions being made centrally and hierarchically that flies in the face of the Industrial Relations Framework and the ethos of Agreements being reached at the lowest level. One of the main problems affecting local decision making is the remote control of a budget and the overriding influence of finance in the operation at local level, leaving our members feeling disconnected and disillusioned with their ideas and their views sidelined and ignored. Addressing this culture should also be a key part of our policy going forward.

We need to secure an Agreement that brings tangible changes to the current culture in line with our agreed commitments, where the company absolutely recognises that its greatest asset is its employees and that it will cease treating them as a barrier to budget achievement, leaving them disconnected and disillusioned. The workplace needs to be more human, and our members need to be treated with dignity and respect at all times.

The business needs to recognise that bureaucracy and the obsession with efficiency are totally undermining the vocational instincts of service that postal workers have always embraced. We need a work environment which starts with people solving problems, identifying what they need to do, taking into account their knowledge of customers and the job.

Not everything can be quantified by data or measured science, Professor Andrew Oswald, Dr Eugenio Proto and Dr Daniel Sgroi from the Department of Economics at the University of Warwick have carried out studies that conclude that happiness makes people more productive at work and that happier workers use the time they have more effectively, increasing the pace at which they can work without sacrificing quality.

Production Control is another development which threatens to manage people via unacceptable overt surveillance practices; this will add to this sense of an in-human workplace and must be opposed. We do not need more bureaucratic systems, we need less. We need more organic approaches to responding to the daily challenges in the workplace, one that puts personal experience, skills, innovation and human problem solving at the heart of our operations.

As well as addressing issues around culture change, it is also critical that we fully employ and exploit the provisions of the IR Framework, the rights it gives to our Representatives and the provisions and procedures to be followed to secure local Agreement. The Agenda for Growth Agreement provided for a re-launch of the IR Framework and central to this is better training for managers and local Representatives. We have now agreed to roll out a joint, one-day IR specific training course for local Representatives and managers. Development on this has commenced and should be deployed in the coming months. This activity builds upon the jointly recognised need for a strong focus on the role and responsibilities of the local parties in carrying out our legally binding IR procedures, supported if required by mediation. In addition, the union has also developed its own hard hitting, one day IR training course for local Representatives to improve their understanding of the IR Framework and provide Representatives with knowledge and skills to secure agreements and ensure its provisions are followed.

The Agreement also clearly positioned us for the potential impact of privatisation and the company behaviours that traditionally drives with the legally binding aspects of the agreement, designed to afford us evident protection. We are aware that our agreement has been criticized by some opinion formers, and indeed the Regulator, as a barrier to efficiency, over generous and too restrictive. Moreover, greater shareholder pressure in a fully privatised Royal Mail together with conclusions from the Regulator’s review may increase the threat to our Agreement. Extending the legally binding commitments currently in place should therefore be another key aspect of our on-going policy.

National Joint Statement on Growth, Efficiency and Incentives 2014

It is quite revealing to research our Agreements and realise that this is not the first time our Agreements have been tested. Despite the Growth and Stability Agreement being deployed in January 2014, by November of that year we had to re-position around the National Joint Statement on Growth, Efficiency and Incentives.

The statement majored on growth via the better utilisation of the existing pipeline and the exploration of more radical solutions which would involve an immediate review of the existing workplan and considering opportunities for more flexible acceptance and delivery times that can better meet customer needs and expand the options for growth.

Again we would argue that since the managerial perspective around OMP would inevitably lead to rationalisation of Delivery Offices, build in stem mileage and adversely affect arrival times at Delivery Offices, current modelling indicates that delivery spans would only go in one direction, later. To combat this, we believe we need “earlier and no later” than delivery start times and a workplan to facilitate it.

The Joint Statement also considered the issue of diversification and business investment needed to support the growth plan. While the business would argue there has been considerable investment, much of that has been a catch up for years of neglect when Royal Mail failed to properly invest in IT platforms, parcel/packet automation and handheld technology.

In respect of diversification whilst movement has been slow to date, there are now signs of activity in respect of Network, fleet maintenance operations and exploring facilities management growth including property development.

The Joint Statement also gave birth to the ‘Growth Workshops’ concept. This commenced with a national event in February 2015 and then during May and June the event toured the country to give a broad overview of the work undertaken to date and also encourage the input of new ideas from managers and Representatives within the regions.

Following this information sharing, delegates were asked to discuss several topics and feedback their suggestions on how we could grow as a business. The topics were:

Making more use of today’s pipeline.

What could we do if we changed our pipeline.

Royal Mail Local (providing local services including data collection).

A managerial report back from the events stated that delegate feedback was collected at each event, with the overall response being very positive. Managers and Representatives were equally appreciative of Royal Mail Group sharing important information on our business and market. Many attendees were keen to have the information cascaded to the frontline teams and to have some central response to their suggestions.

Below are some of the verbatim comments:

Good to have insight into the market.

Very eye opening regarding the business.

Broadens our outlook not just letters and parcels.

Really positive day.

Refreshingly open and honest.

A real opportunity to input and shape our business.

Great to see everyone working towards the common good. Differences aside and priorities shared.

Collaborative working for joint ambitions.

Good to hear about growth and not just efficiency.

A summary of feedback on ideas could be broken down into six categories relating to: data collection, local services, reviewing the pipeline/network; using the fleet and other assets; and other services and opportunities.

Unfortunately, despite all the earlier discussions around growth and the many ideas generated through the workshops (covering every facet of Royal Mail’s operations and services), it is clear that very little actual or published directly-related activity seems to have taken place around these issues and momentum has clearly been lost.

Any debate about future growth also needs to look at the work of the Growth Forums and Parallel Ops Exec. There is clearly a feeling from the experience to date that the Forums are not working in the way intended, with pressure on the meetings in terms of attendance and frequency and questions about the agenda and the relationship of the Forums to the Parallel Ops Exec. Both Royal Mail and the CWU recognise that the work of both these bodies and their frequency and agenda should be reviewed.

Our on-going policy therefore needs to insist on a re-focus on the whole growth agenda, with serious consideration given to trialling of new products and services and developing a continuing and robust process for generating new ideas to drive long term growth rather than manage long term letters decline.

Recommendation 1: That an Agreement is reached consistent with the above report and which reaffirms commitment to our current Agreements, builds upon them and the growth agenda, resolves all outstanding issues and seeks to extend the agreed commitments, MTSF and the legally binding Agreement for a further five years’.

Recommendation 2: That our Job Security/Resourcing Agreement and the national Joint Statement between Royal Mail and CWU covering Resourcing and Recruitment and Professional Manpower Planning in our operations is applied in full and that managerial grades cease to perform work proper to CWU grades.


SECTION 2: FUTURE DESIGN


The review of our existing Agreements with Royal Mail clearly confirms the series of important protections and joint commitments around managing future change and the introduction of new technology. Royal Mail’s recent presentations on OMP have raised understandable concerns and questions about their future strategy and design for deliveries and the potential wider impact on collections, processing and network.
Whatever the potential risks it is important to remember that, at this stage, OMP is being trialled at a single location and subject to a National Joint Terms of Reference. The testing commenced on January 2015 in Walsall Delivery Office and was estimated to be finished by April 2015 “with a joint report produced and presented to the respective national parties for consideration of next steps”. No formal proposals have yet been received and no Agreement has been reached on introducing OMP beyond the current trial.

Similarly the recent presentations on Production Control and Hours Data Capture which Royal Mail say are needed to “support the pipeline, simplify, reduce workload for users and give increased central visibility/ control” clearly present worrying potential implications for members. The discussions to date and the requirement for confidentiality have not involved any talks on future deployment but rather involved a report on a tendering process but with no formal proposals to the CWU or any agreement on any wider roll out. However, it is also clear that automation will inevitably form part of any future Agreement.

We would argue that the only way to change the direction of Royal Mail’s current travel is to face the facts in respect of the changing world of service provided at the doorstep to customers and the logistics solutions provided to posters, and redesign Royal Mail. That means:

redesigning our operations to grow and enhance Royal Mail’s position as the provider of choice and the UK’s best end to end total delivery, distribution & logistics solutions provider with global reach;

honouring our heritage and recognising that Royal Mail is no ordinary employer and has a responsibility to maintain and enhance its role as the only provider with total connectivity that supports the social, industrial and commercial life of the country seven days a week;

reconciling a business approach in respect of our people and operational/financial performance which embraces a philosophy that develops a work life ideal which is about more than just money and jobs, but also about a new approach which responds to genuine mutual interests and delivers on-going success through conviction, respect and dedication.

using the fundamental and distinctive characteristics of the company and its employees is to create a working environment and vocational sense of purpose which reconciles entrepreneurism, innovation and public service and a work experience in which we would all be comfortable and proud for our own children/relatives to work in;

creating a genuine democratic enterprise built on adult to adult relationships, which has at its heart a commitment to do things together in the best interests of all involved, everyone working for each other, the success of the business and everyone sharing in the reward; and

jointly defending the retention of the six day Universal Service Obligation (USO), maintaining the trust of the people of the United Kingdom in our ability to deliver it and to recognise that meeting those ideals requires offering our employees, both new and old, the quality of employment and terms and conditions that reflects their significant contribution to UK communities. Whatever else we say about operational redesign and alternative products and services, it is critical that the core letters and parcel business and the future of Royal Mail is linked to the continuation of the USO.

The Hooper report in 2008 argued that Royal Mail not only needed to improve efficiency but “embrace modernisation through diversification and expansion of its current delivery product, delivery span and service range” and consider new commercial opportunities around fulfilment, publications and advertising mail.

Our task is to position the business to reconcile its social obligation with its growth in commercial product offerings, to meet the mutual interest commitments as detailed in the Agreements between the business and its recognised Trade Unions, and to maximise natural synergies in the interests of pricing and profit.

This means maximising the potential of our current core USO delivery offering to deliver new commercial product offerings along with USO products from e.g. 7am onwards.

Operational redesign also needs to recognise the complete turnaround in the industry of post and delivery, its changing product range, the merging evolution of technical and physical, the convenience agenda and the shift in emphasis from poster to receiver. The whole postal agenda is now being driven by the expectation of the individual household rather than the big poster, whilst both retaining their importance. Equally there is clear evidence that established trading models are being even further challenged by companies like Amazon and Uber and it is essential that Royal Mail recognises that its current design is opening up opportunities for the competition and not increasing ours.

We have to meet that challenge and have an operational footprint that places operations as close as possible to all postal receivers, positions us not only in front of competitors but more importantly in front of innovations. An operating structure that enables us to embrace generational developments and leading edge changes without constant bespoke and potential financially prohibitive services bolted onto our core operation, i.e. a core operational structure that is designed with 24 hour potential for future advances.

To achieve this vision we will have to move to a new pipeline enabled by an automation strategy which embraces the advantages of the differing potential footprints of inward and outward technologies, along with the potential product benefits of inward operations being closer to the customer.

It has become apparent in recent months that business processing and automation strategies have been challenged by significant changes to workload and in particular volumetric, due to the growth in medium parcel traffic and tracked items which has produced capacity restraints within the upstream Network. It has also become increasingly clear that such capacity restraints along with the long term viability of some current large machine capability has created friction between the various letter and parcel automation programmes which are effectively now competing for both funding and Mail Centre floor space.

We must continue to test managerial logic to ensure that we fully understand current and future machine capability and the implications to our members across all functions. Additionally we must ensure that any agreed automation strategy is progressed in the round, meets the requirements in relation to mail presentation across the full range of products and services and complements the CWU vision on a Future Delivery model.

A new pipeline/workplan will have to not only open up increased core and commercial delivery product and delivery span opportunities but also offer the potential for geographically specific click and collect, printing and mail merging, design and advertising advice, sophisticated marketing and targeting data, fulfilment services, stationery supply, paperless office, archiving solutions, design and mail opening and electronic advance notice. Equally the increased capacity of our new design would enable the potential for robust trials on the ideas generated by the national and regional growth forum events i.e. Royal Mail Local etc.

As well as the core parcel and letter markets and notwithstanding the revolution in that area, we will also develop the concept of a more holistic distribution company, moving into new diversified types of market with greater growth prospects. That means maximising our fleet and haulage capability, commercialising empty legs and providing logistics solutions to other organisations (mail, parcels, retail or other), pick and pack and warehousing to enable optimization of our assets and future investment.

The business is already talking about expanding our fleet maintenance operations, exploring facilities management growth including property development and maintenance to also provide extra revenue in a similar way to how GLS has done over the years.

Equally we should consider enhancing the relationship with the Post Office in anticipation of re-integration at some stage in the future by maximizing Crown Office Royal Mail product offerings and responding to the demise of the sub office network by considering offering PO Counter products, along with enhanced click and collect opportunities from an enhanced Enquiry Office operation.

Adoption of the polices in this document will enable us to move the arguments away from the company’s short-term, cost driven agenda, to one based on a long term programme of investment and growth which rests on:

Strong defence of the six-day USO.

Defending and developing the home market.

Operational redesign.

Creating a total distribution company.

Greater investment in plant and equipment.

Developing new markets with greater growth prospects.

Embracing commercial opportunities around fulfilment and advertising.

Developing new products and services for customers.

Introducing a wider daily delivery span both earlier and later.

Better use of our haulage and warehousing facilities.

Expanding Facilities Management and Fleet Services and
maximising links with the Post Office and Crown office network.

Recommendation 3: That no agreement is given to OMP/Single Wave until a new pipeline/workplan is agreed which embraces the spirit and intent of the above report and ensures that the delivery of letters and packets together can commence from e.g. 7am and which ensures that all deliveries are performed properly in line with our Agreements e.g. start times, equipment, tools and meal breaks.

Recommendation 4: That no deployment of Production Control/Automated Data Capture will be agreed until a National Agreement is secured which ensures that the CWU at all levels have access to all information produced, that details how such information relates and applies in the workplace consistent with our current Agreements and ensures individual employee protection.

Recommendation 5: That the GS and DGSP Departments continue to work closely together on the People’s Post Campaign to defend the six day USO and tackle the continuing threat posed by minimal employment standards, unfair competition and the unacceptable actions of Ofcom.

SECTION 3: PAY, HOURS AND LEAVE


Further to the In-committee discussion paper presented to the Postal Executive in November 2015 and Motion 1 carried at the Postal Executive meeting on 6th January, this Section provides updated pay information to help determine our policy priorities and shape our claim for 2016.

Using the very latest paybill data from Royal Mail and the most recent set of economic and settlement indicators, it is now possible to provide some more accurate, up to date estimates of the likely costs relating to various elements of our claim for 2016.

As well as considering the level of any award from April and the key economic and settlement comparators, we also need to consider the duration of any deal. Given the scale, complexity and timescales of the issues we face around future change, redesign of the pipeline and the significant costs involved in resolving issues around pensions, holiday pay and securing a substantial reduction in hours, we will need to consider the option of securing a relatively straightforward one year deal for April 2016 but as the start point for a longer term set of talks that address wider issues around future strategy and long term reward.

Basic Pay

The total paybill cost for CWU represented grades (i.e. basic pay and allowances including NI and pensions) is £4.37 billion. This includes the cost of the 2.8% rise to basic pay and allowances in April 2015. (Please note these are Royal Mail figures and should therefore be treated with caution).

The total paybill figure comprises the following:

Pay Element £mTotal Fixed Costs (basic pay incl. LW)3,677,235,522Total Overtime 482,747,343Total Shift 111,393,431Total Skills Allowance 32,693,998Total Legacy Bonus 21,375,460Total Reserved Rights 14,867,174Total Paybill 4,372,823,333
The total paybill figure of £4.37 billion represents 46% of Royal Mail’s total revenue of £9.4 billion in the 2014/15 financial year.

According to the latest paybill data, the cost of a 1% rise in basic pay and allowances for CWU-represented grades would total £43.7million.

A 2% rise in basic pay and allowances would therefore cost £87.4m with a 3% rise costing £131.2m.

Each half a percentage increase in basic pay and allowances would cost the business £21.8m.

The Unite/CMA grades in Royal Mail are currently balloting for industrial action over a 1.3% pay offer from their September 2015 review date.

Employee Shares

On 19th November 2015, Royal Mail disclosed a dividend payment of 7.0p per share payable on 13th January 2016. This means that eligible employees who have received 832 employee free shares were paid a dividend of over £58.

In total, each eligible full-time employee will have received around £306 in dividends by end of January 2016.

By October 2016 the first lot of free shares (613 per eligible full-time employee) will have been in the SIP for three years. Based on a share price of £4.87p the shares would be worth £2,985 in total.

CWU Research has estimated that for basic rate taxpayers the sale of shares in April 2016 will net £2,317 falling to £2,116 for higher rate taxpayers. If employees keep their shares in the SIP and sell after five years then no tax or NI is liable on the full £2,985.

In relation to a question from the In-Committee session about the likelihood of staff selling their shares, CWU Research concludes that it’s difficult to use previous privatisations as a guide to the future behaviour of Royal Mail employees. In the case of BT, for example, employees were not given free shares but 10% of shares were reserved for employees to buy.

Since privatisation, Royal Mail has now paid out a total of £413m in dividend payments to shareholders.

Economic Indicators

Any pay claim for 2016 will need to be set against the usual range of key economic indicators including UK median pay rates, settlement levels, inflation (current and forecast) and earnings growth.

The basic weekly pay of an OPG outside London is £405.81 – well below the UK median full-time weekly rate of £518.

Latest settlement data shows that median basic pay awards remain steady at 2% according to the latest reports from both Income Data Research (IDR), as at October 2015 and XpertHR, as at November 2015. Labour Research Department’s (LRD) analysis of union-negotiated deals shows settlements running (higher) at 2.5% in the three months to November last year.

Looking ahead, XpertHR forecast median private sector settlements of 2% in 2016 with an interquartile range (i.e. 50% of all deals) falling between 1.5% and 3%.

The latest inflation data shows Retail Prices Index (RPI) rising to 1.3% in January 2016 (up from 1.2% the previous month) while CPI rose to 0.3% (up from 0.2%). In terms of inflation forecasts, IDR is predicting an RPI rate of 1.9% in April 2016 while HM Treasury forecast an RPI rate of 2.1% over the course of 2016 (CPI forecast 1.3%).

In relation to average earnings, XpertHR expects growth of 2.5% in 2015 rising to 3.2% in 2016 while HM Treasury forecast average earnings growth of 3.4% in 2016.

Hours/Shorter Working Week

The last cut in hours was secured for members under the 2010 Business Transformation Agreement which reduced the working week for Royal Mail Operational Grades by one hour from 40 to 39 hours gross (equivalent to 35 hours 40 minutes net).

Motions 9 and 10 carried at 2015 Annual Conference both commit us to “pursuing a substantial reduction in the working week” but while the shorter working week has long been CWU policy, the costs of delivering any “substantial reduction” in the working week will be significant. According to Royal Mail, the costs associated with a cut in hours comprise two elements: the cost of paying FT employees for the hours no longer worked, plus the cost of paying overtime to cover the remaining workload.

A shorter working week also has a cost impact in relation to part time employees by effectively increasing their hourly rate of pay. For Operational Postal Grades (OPGs), a one hour reduction from 39 to 38 gross weekly hours would generate a 2.63% increase in part-timers hourly rate.

Royal Mail estimate that a one hour cut in the working week would cost in region of £165m or about 3.7% of the CWU total pay-bill, so the reality is that any deal to deliver a “substantial reduction” in hours may need to form part of a wider, long term Agreement around the future of deliveries and future design of the network.
Evidence that shorter hours can boost output has been around for decades. Recent research by the New Economic Foundation confirmed the benefits of shorter hours and set out the case for a reduced working week. According to the NEF, those who work less tend to be more productive, hour for hour, than those regularly pushing themselves beyond the 40 hours per week point, they are also less prone to sickness and absenteeism and make up a more stable and committed workforce.
Shorter working weeks can be competitive too: the Netherlands and Germany have more shorter working weeks than in Britain and the US, yet their economies are as strong or stronger. The latest trail blazers for the shorter working week are in Sweden, where a variety of major companies have cut their working week to improve wellbeing and, as a result, have reported significant improvements in productivity and lower rates of staff turnover.

In the UK the truth is that despite working fewer hours than our grandparents and parents, most surveys paint a picture of British workers feeling exhausted and under growing pressure. A recent report by the Chartered Institute of Personal Development (CIPD) found many employees feel under “excessive pressure” with “far too many people doing more work than they can cope with”. It described a “wellbeing vacuum” in UK workplaces, which is costing UK employers dearly in absenteeism. These findings confirmed an earlier CIPD report which found that: employees felt they were working harder; the work was more demanding and intense; with overwhelming and numerous deadlines burdening workers with ever more tasks.

Holiday Pay

This has generally been recognised as a difficult issue because of the overall cost implications and uncertainty over the developing legal position. It was hoped that the company was prepared to agree changes now and recognise that all overtime should be included in future holiday pay calculations, even though they would arguably look to offset the cost of this elsewhere.

Annual leave

In relation to leave, we have a series of Conference motions calling for a number of improvements to annual leave provision. These include:

Uprating leave entitlement at every five year step;

Introducing a new step after 10 years’ service; and

Giving staff greater flexibility to purchase up to 7 weeks’ leave.

Royal Mail estimate that the cost of adding one additional days’ holiday for all CWU represented grades would total £28.5m (around half a percent of the total paybill).
Length of Service (yrs)No/EmployeesPercentage518,08015%5-9.9916,78114%10-14.9921,73919%15-19.9921,35518%20+38,96033%Total116,915100%
While Royal Mail have yet to provide an estimate of the cost of adding an additional holiday increment (after 10 years’ service), they have provided a length of service profile for CWU employees (see above). This shows that around 20% of employees fall into the 10 to 15 year bracket which suggests the cost of introducing the new 10 year leave step would be around £5.7m (a fifth of the £28.5m total).

The table above shows the average length of service for CWU represented grades is currently 16 years.

RM has also provided an age profile for ‘frontline delivery, processing and collection OPGs’ (below). This shows the ‘average’ frontline employee to be aged in their mid-forties.

INCLUDEPICTURE "cid:image003.png@01D139A1.2682CFC0" \* MERGEFORMATINET
While the option of purchasing extra leave is clearly cost neutral (there is still a wider question about the practical ability of employees to take any extra leave they have purchased).

Royal Mail Finances

In preparing our pay claim for 2016 we also need to factor in the current state of Royal Mail’s finances. The latest annual accounts show that the company’s finances have improved significantly over the past five years:

Total revenues have risen by £1,009m (or 11.9%) – up from £8,415m in 2010/11 to £9,424m in 2014/15.

Operating profits (before transformation costs) are up from £210m in 2010/11 to £611m in 2014/15 – a rise of 190%.

In UKPIL, overall headcount has fallen from 155,181 in 2010/11 to 142,910 in 2014/15 - a fall of 12,271 (8%).

Since 2010/11, Royal Mail has paid a total of £828m in transformation costs.

The latest half year results for 2015/16 published in November 2015 confirmed Royal Mail’s steadily improving financial position:

Revenue steady (with a 1% rise in parcel revenue offset by 3% fall in letter revenue);

Operating profit (before transformation costs) of £342m;

Operating profits (after transformation costs) of £248m;

Operating profit margin (after transformation costs) of 5.6%;

Profit before tax of £240m; and

Free cash flow of £49m.

According to analysts CMC Markets, Royal Mail’s latest trading update for the nine months to December 2015 showed the company was “moving in the right direction” and sent Royal Mail’s shares 17p higher to 438.5p. Royal Mail Group reported a 6% rise in parcel deliveries over the Christmas period when it handled 7.5 million more parcels in the build up to Christmas than the year before.

Royal Mail Efficiency

Ofcom’s annual monitoring update on the postal market 2014/15 presented a good story on efficiency, price, customer satisfaction and profit margins (something which may make it harder for the Regulator to impose any new significant regulatory measures on Royal Mail). The key findings were:

Ofcom monitors movements in total costs in terms of price, volume, efficiencies achieved and other one-off costs as an indicator of Royal Mail’s efficiency. This is known as PVEO (price, volume, efficiency and other) analysis. This measure indicates an underlying efficiency improvement (excluding transformation costs) of c.2.6% against c.0.7% the previous year;

Using workload as a measure of efficiency, Ofcom found that underlying real unit costs (excluding transformation costs) decreased by c.2.2% (2013-14 restated: c.0.4%);

Royal Mail’s own measure of productivity improvement for 2014-15 was 2.5% for both Mail Centres and Delivery Offices, which was within Royal Mail’s target of 2-3%. This was achieved by a 2.3% reduction in gross hours despite a slight increase in workload (0.1%);

Over the last five years, revenue per full time equivalent (FTE) employee adjusted for Consumer Pricing Index (CPI) has increased by 8.2%, whereas people costs per FTE adjusted for CPI has stayed static.

Review of Efficiency Measures

Whilst the work on this was launched it has never been fully explored as priorities have constantly shifted focus. However, it is clearly important we ensure we have a mutual understanding of how efficiency is measured especially with the assumptions made by the Regulator and the reported daily pressures in the workplace.

The Agreement in BT 2010 included a commitment to a system that is fair, objective, equitable, fully understood and benchmarked on a like for like basis, and our on-going policy must demand that we pursue that commitment to a conclusion.

Incentive/Bonus Payments

Following on from the stop-gap arrangement for 2014/2015, we were due to negotiate new arrangements going forward. As previously discussed with the Executive this will continue to be a difficult set of negotiations, particularly in the absence of agreed productivity measurement systems and standards. Clearly this still remains a difficult issue but remains policy which we need to pursue in future talks.

Parcelforce Worldwide, Royal Mail Specialist Services (RMSS)

Although the Agenda for Growth Agreement included a three year pay settlement across all functions, the above business units remain recognised as separate Pay Bargaining units within Royal Mail Group and in previous years have been subject to separate Pay negotiations. The reality in the current climate is that it is extremely unlikely that any unit would be allowed to agree levels of reward which exceeded that negotiated in the core letters operation.

However we recognise that across the range of pay and reward agenda points covered in this section including pay rates, working time, allowances etc, the starting point differs from Royal Mail core operations, across the various functions. It therefore remains imperative that we can ensure that pay discussions covering these bargaining units address the specific market and operational challenges these businesses face and meet the aspirations of our members. To that end we would always look to reserve our position in regard to the shape and structure of any deal in these areas to maximise or tailor the benefit package

Recommendation 6: That we seek a one year Pay and Reward Agreement from April 2016 which seeks to achieve our current policies around pay, hours, and leave (including holiday pay) and a further longer term Agreement aligned to the wider negotiations around future change. That within the above strategy, agreed pay/ reward arrangements for specific bargaining units e.g. Parcelforce and RMSS are shaped to meet the challenges and member aspirations within those units.

SECTION 4: PENSIONS

The Pensions Agreement in the Agenda for Growth committed both parties to “safeguard the future of the Royal Mail Pension Plan and improve the Royal Mail Defined Contribution Plan” while recognising that “the future of pensions can best be maintained through the terms of the legally binding Agreement and by RM and the CWU jointly developing future pension strategy”.

The two outstanding motions on pensions relate to:

How we raise awareness of the Defined Contribution (DC) scheme and increase take up of the higher tiers of contributions; and

Setting up a Pensions Working Group to look at the issues and provide recommendations going forward.

The first meeting of the Pensions Working Group was held on 2nd December 2015 with the initial aim of establishing a clear understanding of the current financial position both in relation to the DC and Defined Benefit (DB) schemes and to start scoping the full range of potential options going forward.

While the CWU will continue to defend the existing DB scheme (RMPP) and seek improvements to the current DC scheme (RMDCP), we clearly face some major challenges around future funding for the DB scheme. Securing a new settlement on pensions that both safeguards the DB scheme and seeks to improve the DC scheme will be difficult. The wider developments witnessed in UK pension provision in both the private and public sectors provide a generally unfavourable backdrop. Over recent years we have already seen big changes to the Royal Mail Group (RMG) pensions. At the same time we have seen the Government introduce changes to pension law and to the system of state pensions.

UK Pension Provision

The latest survey of UK pension provision by XpertHR shows the top types of pensions on offer in UK workplaces are:
group personal pension plan - offered by 46.3% of our survey respondents;
money-purchase or defined-contribution scheme - 21.2%;
final salary scheme – 19.1%;
group stakeholder pension scheme - 18.4%;
career-average scheme - 11.3%;
NEST - 9.1%; and
hybrid scheme - 1.8%.
There are a couple of important points to note from the findings. Firstly, the results reflect the move to career-average pensions in the public sector, with 11.3% of all respondents now offering one, compared with 6.6% in HYPERLINK "http://www.xperthr.co.uk/survey-analysi ... ey/153080/" the 2014 survey. Secondly, the decline in final-salary pension schemes seems to have slowed, with 19.1% of this year's survey respondents offering such a scheme, which is on a par with the 19.2% of respondents from the 2014 survey. However, it should be noted that nearly two-thirds (64.5%) of final-salary pension schemes covered by the survey are no longer open to new members.
Final-salary pension schemes continue to predominantly be the preserve of the public sector - 57.9% of respondents in the sector have such a pension, compared with just 15% of private-sector respondents. With the move to career-average pensions in the public sector, this is now the most popular type of pension, offered by 71.1% of public-sector respondents. Career-average schemes are yet to take off in the private sector, offered by just 5% of workplaces. The most common type of pension scheme in the private sector is a group personal pension, provided in just over half (51.3%) of companies.
Table 1: Employer and Employee Pension Contribution Rates, 2015

Employer Contribution Rate (median, %) Employee Contribution Rate (median, %)Career-average scheme 15.06.5Final-salary scheme14.06.8Money-purchase or defined-contribution5.03.0Group personal pension plan4.03.0Group stakeholder
Pension scheme 4.01.5NEST1.01.0
The gap between the level of contributions into final-salary pension schemes and other forms of pension saving is shown by the findings in table 1 (above). Final-salary schemes, while noted as being expensive for employers (a median 14% employer contribution, according to the research), are often acknowledged as providing the highest level of benefit in retirement. The survey also recorded the highest level of employee contributions into these pension schemes, at 6.8%.

From DB to DC

Conventional wisdom is dictating that decent pension schemes are being replaced by more insecure market based alternatives. Analysis by JLT Employee Benefits published in January 2016 found DB provisions in the FTSE 250 companies have fallen by around 16% in the last year. Their research shows that just 49 FTSE 250 companies are now providing more than a handful of their employees with DB benefits and only 11 are providing them to a significant number of their employees.

The trend away from DB schemes was also highlighted in the latest annual survey of UK workplace pension provision by the National Association of Pension Funds (NAPF). The latest report for 2014 (based on responses from 250 NAPF fund members representing 840 pension schemes throughout the UK) found that for private and ‘other public sector’ pension schemes:

The proportion of active members in DB schemes has fallen 5% since 2013, to 16% of all scheme members. This fall in active membership has been driven by the continued closure of private sector DB schemes.

Just 14% of private and ‘other public sector’ DB schemes were still open to new members but this fell to 8% among private sector schemes.

The proportion of DB schemes open to future accruals remained unchanged from 2013 at 50% for private and ‘other public sector’ schemes (53% for private sector only).

Two thirds of respondents (67%) said their funding position had improved in the last 12 months (up from 48% in 2013) and as in previous years the most common approach to improving funding positions was through higher employer contributions (47%).

Despite no increase in the proportion of DB schemes being closed to future accruals between the 2013 and the 2014 surveys, the NAPF reports that further closures of DB schemes can be expected. Two thirds of those with schemes closed to new members but open to future accruals said they anticipate further changes to their scheme. Of those:

19% said they expected to close their current schemes to future accrual in the next 5 years and switch to either a trust-based Defined Contribution (DC) scheme (11%); contract-based DC scheme (7%) or switch to an alternative scheme such as cash balance, hybrid or career-average (1%); whilst

21% expected to retain their DB scheme but offer benefits on less favourable terms to existing members (up from 15% in the 2013 survey).
As well as the move away from DB schemes we have also witnessed recent changes to some of the key public sector pension schemes.
Public Sector Pension Scheme Changes

In 2011, the coalition Government announced plans to make public sector staff pay more and work longer for their pensions in order to save billions of pounds from its pension bill. The plans led to a nationwide strike of public sector workers at the end of November 2011.

Following further negotiations, the Government announced in December 2011 that most Trade Unions had agreed in principle to new pension schemes from 2015. PCS, the biggest civil service union, refused to sign up to the Government’s proposals.

The Government then announced the details of its proposed final Agreement on 12th March 2012. The final agreed position was that increased member contributions would be phased in over the three years from 2012. From 2015 the various pension schemes under consideration would be changed to a career average basis with their normal pension ages rising in line with the state pension age.

PCS continued to oppose the changes calling them ‘unfair’ and its members voted to reject the offer in a national consultative ballot. Nevertheless, the Government legislated in the Public Service Pensions Act 2013 for a Framework to enable changes to public service pensions in line with its objectives and the recommendations of the Independent Public Service Pensions Commission.

The Act enabled the Government to introduce new public service pension schemes that would provide pension benefits based on career average rather than final salary and individuals would have a normal pension age linked to their State Pension age (except for the schemes for the firefighters, police and armed forces, which would have a normal pension age of 60).

The Act required that, except where transitional protection has been agreed for those closest to retirement, existing schemes would close for future accrual by April 2015 (2014 for the local Government schemes in England, Wales and Northern Ireland). Key measures in the Act include:
Enable the creation of career average public service pension schemes to replace the largest existing final salary schemes;

Link Normal Pension Ages to State Pension Age to manage longevity risk (with the exception of fire service, police and the armed forces);

Introduce an employer cost cap as a way of controlling unforeseen changes in cost; and

Allow for the provision of transitional arrangements and protections where necessary.

A brief overview of pensions in the civil service and the NHS is set out below:

Civil Service Pension Scheme

The Principal Civil Service Pension Scheme has five sections: Classic, Classic Plus, Premium, Nuvos and Alpha.

The Classic, Classic Plus and Premium sections are final-salary schemes. Nuvos has been the scheme offered to new joiners since 30 July 2007 and is a "career average" scheme.

Alpha is a career average scheme that was introduced on 1 April 2015 as a consequence of the Public Service Pensions Act 2013.

PCS opposed the new scheme on the grounds of cost and increased retirement age. However, they also stated that their Hands off our Pensions campaign led to negotiations on the details of the scheme which achieved the following concessions:

Protections for members closer to pensionable age. They will stay in their current scheme until they retire.

Improving the accrual rate for the new career average scheme – the rate at which your pension builds over time.

From 2015 part-time workers will only pay pension contributions on their actual earnings - not as now, based on their full-time equivalent salary.

New ‘Fair deal’ arrangements mean that, although we will continue to fight privatisation proposals, if members’ jobs are privatised, they will stay in the civil service pension scheme while doing the same work with the new employer.

Changes to the NHS Pension Scheme in 2015

Before 2015 the NHS had one pension scheme with two sections: the 1995 section and the 2008 section. For NHS staff, these both operate as final salary schemes.

As a result of the Act, the ‘2015 NHS Pension Scheme’ was introduced. The main features of the new NHS Scheme include:

A Career Average Revalued Earnings (CARE) scheme, with benefits based on a proportion of pensionable earnings each year during your career.

A build up rate of 1/54th of each year’s pensionable earnings with no limit on the number of years that can be taken into account. This is a higher build up rate than both the 1995 and 2008 sections of the NHS Scheme.

Revaluation of active members’ benefits in line with a rate set by Treasury plus 1.5 percent per annum.

A Normal Pension Age at which benefits can be claimed without reduction for early payment linked to the same age you are entitled to claim your State Pension (or age 65 if that is later).

Pensions in payment to increase in line with a rate set by Treasury.
Royal Mail Pension Plan (RMPP)

Royal Mail employees who started working before April 2008 are members of the RMPP which provides a final salary pension on retirement. For service after April 2008 this changed to a career salary defined benefit. In line with the terms of our AFG agreement, the CWU will clearly want to do all we can to safeguard the future of the DB scheme and to work with the business to look at all future options, including benchmarking with the very best final salary schemes. While we have yet to receive any formal pension proposals from the business, they are suggesting there is a major problem over future funding of the RMPP beyond March 2018.

At the recent presentation to the National Briefing in February, Jon Millidge, Royal Mail Group HR Director, said that (without a highly unlikely turnaround in market conditions) “it will not be possible to keep the DB plan open in its current form beyond March 2018 when the surplus has expired and the cash contribution rate required from the company will be over 40%” (see table on page 29). There is, therefore, a real concern that the business will be looking to cease or change the DB scheme from March 2018. RMPP Company Contribution Rate Since 2009:
EMBED Excel.Chart.8 \s
Any proposed changes to the Royal Mail DB scheme will be considered by the CWU and the members of that scheme as an ideological attack on past promises, our members’ conditions and the future welfare of their families. Any proposals to move away from ‘defined benefit’ will be seen as a deliberate cost cutting exercise which will force our members to have an increasing reliance on inadequate state pension, health and welfare benefits.

However we also need to recognise that there are real issues around future funding and contribution rates post-March 2018 and that we will need to explore a range of possible options, establish more clearly the exact funding position going forward and consider future accrual, contribution rates and pension benefits.

Royal Mail Defined Contribution Plan (RMDCP)

In addition to the 90,000 members of the Defined Benefit scheme, there are now around 44,000 CWU members in Royal Mail’s Defined Contribution Plan which was introduced in 2008. However, the latest annual presentation by the Trustees to the CWU on the current state of the DC scheme in November 2015 highlighted some major problems around the level of contributions and likely future benefits.

At present, the DC scheme is raising concerns about the required level of contributions members need to make to provide a decent pension, the number of members paying contribution rates at the highest tier and whether the scheme in general is meeting the moral and corporate responsibility standards we expect from our mutual interest employer.

The current contribution rates into the RMDCP are set out in the table below:

TierEmployee paysRM paysTotalNursery (3-12 months)1%1%2%14%7%11%25%8%13%36%9%15%
The latest figures provided by the Trustees on the level of contributions into the scheme show that:

there are still 24% of scheme members on the nursery tier (where employee and employer pay a contribution rate of just 1% each);

just over half of scheme members (54%) are at tier 1 (employee 4%/employer 7%);

16% are at the new default tier 2 (for members joining after April 2014); and

only 8% of members are at the highest tier 3 (employee 6%/employer 9%).

We believe that the current DC arrangements and pension benefits are inadequate (particularly for members at the lower tiers) and that new arrangements are required which provide far more security and a more collective DC approach to deliver an income for all CWU members and more acceptable standards of living and dignity in retirement.

Recommendation 7: In respect of pensions we will protect the Defined Benefit Scheme and seek to extend the current guarantees beyond 2018 and seek further improvements to the design of the Defined Contribution Scheme to make it more collective and give members greater confidence about pension outcome.







NOTES
Workload is more reflective of the amount of work undertaken by Royal Mail than a simple volume count as it accounts for changes in mix
Public sector pension deal outlined by government, 20 December 2011, HYPERLINK "http://www.bbc.co.uk/news/mobile/business-16259238" http://www.bbc.co.uk/news/mobile/business-16259238
PCS union renews pension strike threat, 11th January 2012, HYPERLINK "http://www.bbc.co.uk/news/business-16514522" http://www.bbc.co.uk/news/business-16514522
The government’s fourth final pensions offer explained, PCS website, 9th March 2012 HYPERLINK "http://www.pcs.org.uk/en/news_and_event ... 70E606DCE9" http://www.pcs.org.uk/en/news_and_event ... 70E606DCE9
Civil service pensions – current reforms, 20 June 2014, HYPERLINK "http://researchbriefings.files.parliame ... N06744.pdf" http://researchbriefings.files.parliame ... N06744.pdf
Public Service Pensions Act 2013, HYPERLINK "http://www.legislation.gov.uk/ukpga/201 ... 025_en.pdf" http://www.legislation.gov.uk/ukpga/201 ... 025_en.pdf
For further information visit: HYPERLINK "http://www.civilservicepensionscheme.or ... lications/" http://www.civilservicepensionscheme.or ... lications/
Guide to the UK’s largest public sector pension schemes, BBC website, 15th June 2011, HYPERLINK "http://www.bbc.co.uk/news/mobile/business-10912958" http://www.bbc.co.uk/news/mobile/business-10912958
For further information see: HYPERLINK "http://www.nhsbsa.nhs.uk/Documents/Pens ... 6.2015.pdf" http://www.nhsbsa.nhs.uk/Documents/Pens ... 6.2015.pdf
2015 NHS Pension Scheme, Guide for Members, HYPERLINK "http://www.nhsbsa.nhs.uk/Documents/Pens ... 1.2015.pdf" http://www.nhsbsa.nhs.uk/Documents/Pens ... 1.2015.pdf
Changes to the NHS Pension Scheme 2015, NHS Website, HYPERLINK "http://www.nhsbsa.nhs.uk/Pensions/4017.aspx" http://www.nhsbsa.nhs.uk/Pensions/4017.aspx

[Martin Walsh]

We have pages upon pages on issues relating to these issues but no comments against the actual recomendations of the PEC !

This is a surprise !

[fishtank]

Kids have a short attention span these days dingo...
There's a lot to read and I've had a heavy weekend.

[fishtank]

Perhaps Teebs ( if he has the time) could fish out the 7 recommendations from the policy document ( maybe separate threads ) and present them in a new thread in a more member friendly format then we could perhaps have a debate on each issue.