Royal Mail Pensions To Change In 7 Days

[Night Tonic]

http://www.hellmail.co.uk/postalnews/te ... 4&zoneid=3

Royal Mail is to implement proposed changes to it's pension scheme in 7 days time.

On the 31st March 2008, the existing pension scheme will be closed to new entrants. Royal Mail say that closure to new entrants is one of a range of changes that are essential if Royal Mail is to stabilise the growing deficit, and to protect as far as possible, the pension provision of existing employees.

Both Unite, the union that represents Royal Mail managers, and the Communication Workers Union which represents a large proportion of workers both supported pension reform, but are vehemently against the proposed changes. Unite, received an overwhelming rejection of Royal Mail's plans in a recent ballot, and the CWU, expected to announce the results of its own localised ballot on the day the scheme is closed to new entrants, is likely to show a similar response.

Billy Hayes, General Secretary of the CWU said that the changes are by no means final and could be reversed but Royal Mail disagrees, saying that members views have been fully taken into account during the consultation process and that the changes will be essential if it is to protect existing earned pension benefits.

Royal Mail first announced an urgent need to change the pension plan a year ago and began a 60 day consultation with CWU members on the 14th November 2007, allowing pension holders to voice their concerns. This closed on the 18th January 2008, after which Royal Mail drew up final plans to change the pension scheme. This was announced on the 3rd March 2008. It includes changes to the retirement age - moving the retirement from 60 to 65, closing the scheme to new entrants, and changing the existing scheme to one based on salary average.

An alleged leaked Royal Mail document found it's way into a major tabloid newspaper last year. Royal Mail quickly dismissed it as 'out of date' and a scaremongering tactic by the CWU, but the CWU countered by accusing Royal Mail of already having reached a decison to increase the age at which staff can retire with a full pension from 60 to 65 in 2010.

Royal Mail denied that any final decision had been made on the pension provision at that time.

Jon Millidge, then director of employee relations at Royal Mail, wrote to the CWU: "The company has already made it very clear that our number one priority is to protect as far as possible the pension provision for our existing employees. You accept, and have asked us to cost out for you, that for the defined benefit scheme to be kept open to new recruits, then our existing people would have to work longer and pay more into the scheme because of the future risk to the company of not closing the scheme."

Royal Mail concluded a 60 day consultation on the future of Royal Mail pensions which included a detailed booklet being sent to every employee, together with the offer to individuals of a personal illustration to show how the proposed changes would affect them personally. The Penson Trustees have also been consulted.

The Trustees are not part of the formal legal consultation process, which is between the pension holders and Royal Mail. However, the Trustees can advise Royal Mail if it has concerns or difficulties with the Group’s proposals including whether the consultation process is legally correct and meaningful, if it has any concerns or any difficulties with the Group’s proposals, that the proposals comply with the legal protections which prevent reductions in past service benefits.

Jon Millidge, now Royal Mail’s Interim Group HR Director said: "These changes have only been decided after very lengthy discussions with the unions - the CWU and Unite - and after taking careful account of the views expressed by individual employee members of the fund. We first announced our intention to consult on changes 12 months ago and the length of time taken to reach a decision underlines the importance Royal Mail attached to engaging its people in a full discussion of all the options available."

The changes willcome into effect on April 1st 2008.

The key areas of the changes are as follows:

• All pension benefits earned before 1 April 2008 will be protected and linked to final salary at the time of retirement.
• Employees can continue to take their pension on reaching 60 but the normal retirement age will increase to 65 from 1 April 2010. It will be possible to draw a pension at the age of 60 and continue working while still contributing into the pension plan until the maximum level of contributions has been reached.
• From 1 April 2008, benefits building up for employee members of the plan will be earned on a Career Salary basis.
• The plan will close to new members from 31 March 2008.
• A new defined contribution scheme will be launched in April 2009 and new recruits joining the company after 31 March 2008 will be able to join it after they have worked for the company for a year.

The Career Salary mechanism for calculating pension benefits from 1 April 2008 means that a separate block of pension would be earned for each year based on the relevant fraction of pensionable pay (1/60th or 1/80th). Each annual block will then increase by inflation - as measured by the RPI up to a maximum of 5% - as the employee works his or her way towards retirement. One feature of the Career Salary approach is that unlike a final salary plan, people are not penalised if they earn less as they prepare for retirement, for example, by working, if they choose, fewer hours.

Both unions have yet to announce whether industrial action is likely to follow, but Royal Mail, already having lost contracts to competitors during stike action in 2007, could see further losses if strke action resumed, with customers looking closer at their postal expenditure and choice of provider. DX Mail services reported a 30% rise in sales during industrial action last year.

© Hellmail.co.uk - Postal Industry News

[Night Tonic]

And where is Billy and Dave when we need them?

[DGP1]

Both Unite, the union that represents Royal Mail managers, and the Communication Workers Union which represents a large proportion of workers both supported pension reform

Well I never and I can't remember anyone else on this site that supported reform, what I remember is people wanting RM to put the money in it was supposed to over the years it took a holiday

[Night Tonic]

Both unions did though. Also: http://www.timesonline.co.uk/tol/commen ... 613604.ece

[Night Tonic]

From the Times today: http://business.timesonline.co.uk/tol/b ... 613500.ece

Royal Mail fears that its finances are so bad that its pension fund trustees could put it into liquidation to pay off a £3.4 billion deficit.

The postal group has told unions in private that it is possible that the trustees could be legally obliged to demand that Royal Mail be wound up to pay the bill.

Executives are painting a bleak picture of Royal Mail's health, at a time when the company is embroiled in a row with unions over its plan to close its final-salary pension scheme, raise the retirement age from 60 to 65 and cut its contributions.

Unions have also been told that Royal Mail's profits for 2010-11 could be as low as £50million if present conditions continue. Executives say that the letters business has declined, with volumes dropping in competition with e-mails, internet advertising, other operators and customers trading down for services.


Note: "The postal group has told unions in private that it is possible that the trustees could be legally obliged to demand that Royal Mail be wound up to pay the bill." - this is why I've been saying for WEEKS that strikes will not turn things around and there is NO legal challenge. If we strike we put ourselves out of work - its as simple as that.

I rarely mince words and I'm sick to DEATH of hearing calls for strike action. That route is LONG dead. You just have to decide whether you want to stay with Royal Mail or not - and thats the bottom line for ALL of us. Anyone who seriously believes in strike action as a way to change things is frankly barking. Go look at the figures for the pension (which are independently audited) - go look at just how much business we've lost. If Royal Mail goes under, and it could, all our contracts and all the goodwork done by reps, H&S, will vanish. We'll see the postal service bought out and taken over by TNT and DHL. All this claptrap about "we're the only ones that can do the final mile" means nothing if RM goes under - nothing.

[BELIAL]

WHY you so worried about stikes ,and pensions yours has'nt been altered has it?

[Night Tonic]

I want to keep my job Belial - simple as that. I don't want to see my workmates lose money but look at the amount of pensions that have gone under altogether. Strike action to achieve what? If people strike, they at least have SOME idea of what they hope to achieve by it. I've not heard any palpable answers from the strike-happy yet.

[Tman]

Don't worry NT, there'll be no strike vote.
Despite what the usual suspects like to trot out on here, most of the workforce probably realise the seriousness of the situation, and the utter futility of strike action.
They confuse the pressing need to rejig the funding arrangements of the pension fund (as called for by independant auditors and the trustees) with some strange concept of the pension funds being stolen by the RM hierachy and/or Gordon Brown.

Strikes may loosen greedy bosses purse-strings, but I've never heard of them being able to magically fill pension fund's coffers....
(unless it's in the imagination of the Wolfie Smiths of the world........)

[andy2007]

Don't worry NT, there'll be no strike vote.
Despite what the usual suspects like to trot out on here, most of the workforce probably realise the seriousness of the situation, and the utter futility of strike action.
They confuse the pressing need to rejig the funding arrangements of the pension fund (as called for by independant auditors and the trustees) with some strange concept of the pension funds being stolen by the RM hierachy and/or Gordon Brown.

Strikes may loosen greedy bosses purse-strings, but I've never heard of them being able to magically fill pension fund's coffers....
(unless it's in the imagination of the Wolfie Smiths of the world........)

There was a LARGE amount of contributions which RM FAILED to pay. That is where the idea of Pensions being stolen came from.

Personally, I'm not in the Pension scheme. But I know a lot of people who are. And they have been paying into it for many years, under the impression that they would be looked after in their retirement. Now that is being taken away from them, because of the greed of a few people at the "top".

If they were to replace the missing contributions (taking inflation into account), then the situation wouldn't be anywhere near as bad. Obviously, there would still be a need for change, but it wouldn't hit people as hard, as the deficit would be much smaller!

Where would this money come from?
Extra contributions (say 50%) of ANYONE'S bonus, until all the money is replaced. Admittedly, it would cost us all money. But with 6 figure bonuses being given to some, it wouldn't take many years for it to get sorted out.

What do you think?

[srfkdr]

If a strike vote is secured and if Royal Mail is wound up, will the Labour Government pay compensation to all of our competitors who will go out of business overnight because unable to deliver their own mail?

[BELIAL]

Knock me down with a feather! Deja vu.
Just for a second there I could'nt work out wether I'd slipped the pensions DVD on by mistake or nodded off and woken up in a WTL session.

One whiff of industrial action and the RM spinners pop out of the woodwork, with their tired old rhetoric.Heard it all before, it's still piss poor propaganda no matter how many times it's repeated.
Same old stuff trotted out for thirty years with no refinements and not a trace of subtlety.

You could at least put some effort in, try a bit of original thinking , can't be that satisfying just trotting out the lines handed down from the PR dept./strategy meeting.
Go on try something new, a challenge ,but you might like it.
Still nice to see folks nail their true colours to the mast.

98% support for the strikes, 64% support for union recommended acceptance , you don't have to be a genius.
You must try harder.

[Night Tonic]

You really don't get it do you. If you're dumb enough to vote yourself out of employment then by all means standout in the rain.....with all the other drips. You seem to have some self-righteous idea that anyone who can work out that striking will just achieve bugger all is part of some Leighton propoganda effort. Wake up mush.

[srfkdr]

On a slightly different note, even though I am as outraged as the next person about the changes to our pension benefits, this is not the first time ( or the last).

I am a member of Section C, ie 1/60th, so next year if my pensionable salary is £20,000 then £333 will be my Year 1 Block under the new Career Salary scheme.

Those under Section A and B, closed to new members around 20 years ago, and still working get 1/80th, ie £250 as their Year 1 Block, but ADDITIONALLY 3/80th as a lump sum, £750. Three times as much as what I will get!!!

This is outrageous in itself.

What makes this even more outrageous is that the 17 years RM did not contribute to pensions was to the A/B Section Plans, 1/80th. Then they merged with the Section C Plan to bail themselves out!

[BELIAL]

You really don't like the idea of people standing up for themselves do you?

Just make sure I've got this right.
Anyone prepared to fight to maintain(not even improve) their terms and conditions at work is "dumb", a "drip", "self righteous", (you forgot to mention "sheep" this time)Oh you also forgot the 5.4% we achieved last time we went on strike . Your selective memory problem is not improving,now far be it from me to suggest early onset dementia as a possible cause but if treated early the effects can be slowed.

[dvbuk55]

I can see where Night Tonic is coming from but I think it is as extreme a view as those who think taking industrial action is the answer. The fact is the pension scheme IS going to change. That fact has been known since mid 2007 but was largely sidelined because of the furore over the pay and modernisation agreement. Both unions agreed that change was necessary and in law RM doesn't need acceptance of either the unions or the individual to promulgate change, it only needs the agreement of the Trustees, who with the tacit agreement of the unions will undoubtedly go along with it even though there are union Trustee members.

The only real change is the retiring age going up to 65 from 2010. For some that will be a stumbling block but others will have time to increase their contribution to enable them to retire earlier. From my own perspective I have already turned 60 but I haven't retired even though I have taken buy down and so only work part time and that in itself is a good thing to prepare for full retirement.

If you buy a packet of crisps now the price hasn't changed BUT you don't get as many crisps, or smarties in a packet and a mars bar is smaller and like the pension you aren't being asked to pay more you just get less - not ideal I would agree, but better than no pension at all.

There are many things that the union CAN fight for to lower the impact of a longer working life. More holidays, fewer hours worked without prejudice, extra days off for over 60s, work share for over 60s, paid sabbaticals for a period of time, increased paternity rights, inclusion for future bonus payments into pension contributions, shareholder payments paid directly into each individuals pension - it takes imagination BUT most of all it takes commitment and that is something the union need to take on board.