How long before the CDC is ditched?

[tractorboy2]

Aren't we supposed to get information about it , 3 months before it starts ?

[RobertT]

Aren't we supposed to get information about it , 3 months before it starts ?

Yes, that's what was said in the last communication we had!

All the regulation and legislation was finally in place on 1st August 2002, and that's when RM and any other interested companies could apply to The Pensions Regulator for authorisation.
They have said they'll give an answer within a maximum of 6 months.

The application process requires a detailed submission of exactly how the scheme will work and would have taken a while to put together. I don't think it was actually submitted until around September/October.
Although that's just a guestimate on my part!

So at the absolute earliest, that 6 month period will be up is the end of January, but will probably be more like March.
Although TPR might take less than 6 months to decide?

I would assume there's already been some groundwork done in terms of actually setting the scheme up and producing information for us, etc.

Personally I'd be surprised if the actual start date is before May 2023.
That's assuming the doom mongers are incorrect.....

[Woody Guthrie]

That's assuming the doom mongers are incorrect.....

I think the "doom" scenario might not be what you think it is Robert.
Nobody should be happy to see a scheme set up on shaky foundations.

I can't think of a worse time to be setting up a new pension scheme that gives the members very little control over investment decisions from a business point of view, the specific UK economic prospects and a global economic outlook.

We should all be cautious, not just the doom mongers.

[RobertT]

I think the "doom" scenario might not be what you think it is Robert.

I know exactly what the potential worst case doom scenario is.

But I'm not one of those people who always think that because the worst could happen, the worst will happen.

[renrag40]

I have found the the difference between being realistic and being pessimistic has a direct correlation to your length of service in Royal Mail....... after a length of time 1 merges into the other.
The point about Royal Mail being very embarrassed about backing out at the last minute surely can now be put firmly to bed after Thompsons car crash embarrassing performance at last weeks Select Committee ......... they have no shame and embarassing themselves appears to be some sort of badge of honour.

[Woody Guthrie]

My real fear is that this still goes ahead but at a reduced rate of contributions.

That is the real "doomsday" scenario Robert, not that it doesn't go ahead at all.

Being tied into this inflexible plan on a contribution level around that of the DC scheme would be a disastrous worst of both worlds situation for members.

[RobertT]

Who said that was my doomsday scenario? I certainly didn't!

I've said it before on here, if RM decide to reduce their pension contributions into CDC, it'll mean a reduction in accrual rate and/or an increased NRA. Neither of which will be palatable to the members.

In that scenario, CDC will cease(assuming it started) and they'll offer an individual DC scheme, which is what they originally wanted to do from 2018 anyway.

[Woody Guthrie]

Who said that was my doomsday scenario? I certainly didn't!

Nobody did.

[Woody Guthrie]

I've said it before on here, if RM decide to reduce their pension contributions into CDC, it'll mean a reduction in accrual rate and/or an increased NRA. Neither of which will be palatable to the members.

In that scenario, CDC will cease(assuming it started) and they'll offer an individual DC scheme, which is what they originally wanted to do from 2018 anyway.

So you're saying that the chances of the CDC scheme going ahead is purely down to the economics of the business?

I think that's the point most of us have been making from the start.

There are three possible outcomes.

1.They continue with the scheme and the agreed level of contributions.
Given the extremely perilous state of the business finances it's difficult to justify that position.

2. They abandon CDC entirely and switch to a DC scheme.
This would be hugely embarrassing considering the legislation was driven by Royal Mail in the first place and would obviously start another row with the CWU who see CDC as their baby and the only way to guarantee an albiet unguaranteed wage in retirement.

3. The fudge, a CDC on a lower contribution rate.

1 is probably unpalatable to the business at the moment.
2 is probably unpalatable to the union.

It's not looking good is it?

[RobertT]

All the info says it's going ahead. We haven't heard anything official to the contrary!

The company finances aren't great and I'm not sure anyone could disagree with that.

Until we actually hear one way or the other, the future of CDC is a matter of conjecture.

[heapsy]

Can't remember whether it was said 3 or 6 months notice had to be given before the new scheme commenced. Even if it is 3 months, I can't see it happening in April. Can / would they change pension schemes mid way through a financial year? All previous changes have taken place on the 1st April, which tells me it would be 1st April 2024 at the earliest. Being that there are no guarantees with CDC, my guess is they will go for a DC scheme at best, with lower contributions from RM. I could be wrong, as all of us could be, one way or the other.

[RobertT]

The RMPP year runs from 1st April to 31st March, hence why statement dates and any changes happen at that time.

RMPP benefits have been going up by inflation each year since we stopped accruing pension in 2018. That will continue to be the case.
The DBCBS is basically just a glorified savings account and payments into that can be stopped at any time. That will continue to be uprated with discretionary bonuses.

But the new CDC pension, or the RMCPP, will be a completely new scheme not attached to the current schemes at all.
Therefore 1st April is irrelevant and it can start at any time.

[heapsy]

Thanks Bob.