Royal Mail Collective Plan

[RobertT]

They're really just two different ways of doing the same thing.
Personally I would say 7 years is more medium term and therefore drawdown is the better choice.

I'm currently drawing down my SIPP in a similar way to how you plan to. I took the 25% tax free cash upfront and am withdrawing an amount equal to the Personal Tax Allowance each year.
The expectation was that the majority would be taken out over 5 years, with the remainder withdrawn at a slower rate once my Age60 benefits kick in.

I based my maths on the amount in the pot not varying too much with investment returns, but a year in and I've found the investments have performed better than expected. It's still early days, but if that continues to be the case, the money should last longer than I originally planned.

This is what Unbiased say about drawdown & UFPLS: https://www.unbiased.co.uk/discover/pen ... -is-better

[Dexydog]

Thanks, yes I had already read that particular website.
6 of one and half a dozen of the other I suppose.
I'm viewing it the same, assume it doesn't rise too much then anything more is a bonus. (Providing inflation stays steady of course).

[Iva bigredbag]

I just opted out today, you can go on the government Nest pension scheme it is basically identical to the Royal mail contribution pension plan. When you opt out of the collective plan Royal mail have to enrol you on the Nest scheme within a year and they have to make contributions of at least 3%. In the Nest pension scheme, you have total flexibility with your pot. You can withdraw it all at 57 if you want or 67. You can withdraw some of it and use the rest for annuity (life time payments) with other providers. If you die all of your money left in the pot goes to your next of kin. It is way way better than the collective plan. I am now in Nest and intend to remain in it until I retire.

[Postie Malone]

I just opted out today, you can go on the government Nest pension scheme it is basically identical to the Royal mail contribution pension plan. When you opt out of the collective plan Royal mail have to enrol you on the Nest scheme within a year and they have to make contributions of at least 3%. In the Nest pension scheme, you have total flexibility with your pot. You can withdraw it all at 57 if you want or 67. You can withdraw some of it and use the rest for annuity (life time payments) with other providers. If you die all of your money left in the pot goes to your next of kin. It is way way better than the collective plan. I am now in Nest and intend to remain in it until I retire.

Why would employer contributions of 3% be better than employer contributions of around 14%, when you can transfer your share of the collective plan out to a personal pension and do the same as you would with Nest, but probably with a much larger pot of money as your employer has paid much more in?

[SMS1969]

Why would employer contributions of 3% be better than employer contributions of around 14%, when you can transfer your share of the collective plan out to a personal pension and do the same as you would with Nest, but probably with a much larger pot of money as your employer has paid much more in?
[/quote]

Exactly, RM will also contribute to the lump sum booster should you wish to do that too- all free money, you won’t get anywhere near as much in nest. There’s also the AVC option ( RM doesn’t contribute to this ).

[Clappedoutpostie]

Crazy going to NEST over RM’s own pension, as above they pay far less into NEST. Your giving yourself a pay cut.

[RobertT]

I agree with the previous comments!

One of the golden rules of pensions is to always join your company scheme and always pay in whatever it takes to get the maximum employer contribution. Otherwise you're effectively taking a pay cut!
In RM that means joining the RMCPP and preferably the lump sum booster too.

An example full time postie on a basic of £500 per week, would have 8% of pensionable pay going into Nest, which is £40.
While his mate paying into the RMCPP(& booster) would have 21.3% or £106 going in. Possibly more with pensionable allowances.

That additional £66 is only going to cost an extra £7.20(1% basic/1% booster) per week when factoring in tax relief and salary sacrifice(PSE). Meaning a net gain of £59 per week for RMCPP members compared to Nest..

Each to their own, but I'm surprised any postie would be willing and could afford to turn that down!

[posted]

Why would employer contributions of 3% be better than employer contributions of around 14%, when you can transfer your share of the collective plan out to a personal pension and do the same as you would with Nest, but probably with a much larger pot of money as your employer has paid much more in?

to clarify, those in the NEST Shariah Fund scheme actually get 13.6% Contributions from RM. Not sure if that is the case with Iva.

You don't however get the option of the Lump Sum Booster so that's 1% RM Conts missed out on.

[RobertT]

to clarify, those in the NEST Shariah Fund scheme actually get 13.6% Contributions from RM. Not sure if that is the case with Iva.

You don't however get the option of the Lump Sum Booster so that's 1% RM Conts missed out on.

I think only those who were previously in the Sharia fund via the RMDCP, got the opportunity of 13.6% from RM into the Nest Sharia fund. Although I could be wrong.

I'd be interested to know what happens if you decide to switch funds at some point....

[Hyrrokkin]

to clarify, those in the NEST Shariah Fund scheme actually get 13.6% Contributions from RM. Not sure if that is the case with Iva.

You don't however get the option of the Lump Sum Booster so that's 1% RM Conts missed out on.

I think only those who were previously in the Sharia fund via the RMDCP, got the opportunity of 13.6% from RM into the Nest Sharia fund. Although I could be wrong.

I'd be interested to know what happens if you decide to switch funds at some point....

I had that option (was surprised) but decided the RMCPP was a better bet long term + SIPP

[posted]

to clarify, those in the NEST Shariah Fund scheme actually get 13.6% Contributions from RM. Not sure if that is the case with Iva.

You don't however get the option of the Lump Sum Booster so that's 1% RM Conts missed out on.

I think only those who were previously in the Sharia fund via the RMDCP, got the opportunity of 13.6% from RM into the Nest Sharia fund. Although I could be wrong.

I'd be interested to know what happens if you decide to switch funds at some point....

well, what if I told you that upon joining NEST, it had me registered for their default lifecycle Retirement fund. I had to actively chose to witch to Shariah fund.

I think there as something in the original offer letter, before CPP went live, that it had to remain in Shariah... but I'm not sure what mechanism they have of checking.

To be honest, with over 15 years until retirement... Sharia is the best fund they offer.. hence a lot of savers (investors) up in arms about the switch to sukuk. So unlikely many will want to switch away from that anyway.

[TheTrolleyMan]

I just opted out today, you can go on the government Nest pension scheme it is basically identical to the Royal mail contribution pension plan. When you opt out of the collective plan Royal mail have to enrol you on the Nest scheme within a year and they have to make contributions of at least 3%. In the Nest pension scheme, you have total flexibility with your pot. You can withdraw it all at 57 if you want or 67. You can withdraw some of it and use the rest for annuity (life time payments) with other providers. If you die all of your money left in the pot goes to your next of kin. It is way way better than the collective plan. I am now in Nest and intend to remain in it until I retire.

Snap I too joined the NEST scheme so I have total control of my money

[Iva bigredbag]

I just opted out today, you can go on the government Nest pension scheme it is basically identical to the Royal mail contribution pension plan. When you opt out of the collective plan Royal mail have to enrol you on the Nest scheme within a year and they have to make contributions of at least 3%. In the Nest pension scheme, you have total flexibility with your pot. You can withdraw it all at 57 if you want or 67. You can withdraw some of it and use the rest for annuity (life time payments) with other providers. If you die all of your money left in the pot goes to your next of kin. It is way way better than the collective plan. I am now in Nest and intend to remain in it until I retire.

Why would employer contributions of 3% be better than employer contributions of around 14%, when you can transfer your share of the collective plan out to a personal pension and do the same as you would with Nest, but probably with a much larger pot of money as your employer has paid much more in?

Well look at it this way, 14 % is great, but will you see that money? Well if you live to 90+ years old then yes you might, however, there is a good chance you will not get that money as it depends on you living into very old age and even then it's drip fed to you every year. If you are ok with that great go for it. Personally speaking I want my pension when I can still enjoy it, at least I or my family will get it all with NEST. I mean just think about it, you die at 70, if your wife is still alive she only gets 50% of your pension, the rest goes back into the collective pot for other posties to reap the benefits, if your wife is already dead or you are single, then if you have one child they get only 25% of your pension, two kids they get 50% of your pension, no kids then it all goes back into the pot. So no matter what you lost 50 % of your pension minimum. I mean I like my work colleges, but do I want upto 75% of my pension that I contributed all my working life at royal mail going to them if I die? emm no thanks.

I'd rather do nest and keep all the money I put in, so it goes to me or my family. Again, if you want to do the collective plan then go for it. Also read the small print, Royal mail trustees can refuse to give you a lump sum at 57 if you want that, and if the majority of people in the plan actually do live to 90+ years then your money will go down to reflect that. Are you sure they will allow you to take your money out so easily? How would they work out exactly how much money you had if you tried to take transfer out before you retire. Remember its not actually your individual pot of money its a collective pot of money. I would not take it for granted that it will be as good and as easy as you suggest. Anyway, ask me it's a joke of a pension, but again if you want to stay in it, and hope Royal mail will give you what you think you are entitled to when/if you try to transfer into a private pension then go for it.

[Iva bigredbag]

I agree with the previous comments!

One of the golden rules of pensions is to always join your company scheme and always pay in whatever it takes to get the maximum employer contribution. Otherwise you're effectively taking a pay cut!
In RM that means joining the RMCPP and preferably the lump sum booster too.

An example full time postie on a basic of £500 per week, would have 8% of pensionable pay going into Nest, which is £40.
While his mate paying into the RMCPP(& booster) would have 21.3% or £106 going in. Possibly more with pensionable allowances.

That additional £66 is only going to cost an extra £7.20(1% basic/1% booster) per week when factoring in tax relief and salary sacrifice(PSE). Meaning a net gain of £59 per week for RMCPP members compared to Nest..

Each to their own, but I'm surprised any postie would be willing and could afford to turn that down!

Great but you have to live to +90 years old to see the full benefit of that extra employer contribution and if you die before you get to that 90+ years old then a minimum of 50% of that employer boosted money goes back into the collective pot, I mean are you really getting a better deal? Hmmm not very convinced.

[Postie Malone]

I just opted out today, you can go on the government Nest pension scheme it is basically identical to the Royal mail contribution pension plan. When you opt out of the collective plan Royal mail have to enrol you on the Nest scheme within a year and they have to make contributions of at least 3%. In the Nest pension scheme, you have total flexibility with your pot. You can withdraw it all at 57 if you want or 67. You can withdraw some of it and use the rest for annuity (life time payments) with other providers. If you die all of your money left in the pot goes to your next of kin. It is way way better than the collective plan. I am now in Nest and intend to remain in it until I retire.

Why would employer contributions of 3% be better than employer contributions of around 14%, when you can transfer your share of the collective plan out to a personal pension and do the same as you would with Nest, but probably with a much larger pot of money as your employer has paid much more in?

Well look at it this way, 13 % is great, but will you see that money? Well if you live to 90+ years old then yes you might, however, there is a good chance you will not get that money as it depends on you living into very old age and even then it's drip fed to you every year. If you are ok with that great go for it. Personally speaking I want my pension when I can still enjoy it, at least I or my family will get it all with NEST. I mean just think about it, you die at 70, if your wife is still alive she only gets 50% of your pension, the rest goes back into the collective pot for other posties to reap the benefits, if your wife is already dead or you are single, then if you have one child they get only 25% of your pension, two kids they get 50% of your pension, no kids then it all goes back into the pot. So no matter what you lost 50 % of your pension minimum. I mean I like my work colleges, but do I want upto 75% of my pension that I contributed all my working life at royal mail going to them if I die? emm no thanks.

I'd rather do nest and keep all the money I put in, so it goes to me or my family. Again, if you want to do the collective plan then go for it. Also read the small print, Royal mail trustees can refuse to give you a lump sum at 57 if you want that, and if the majority of people in the plan actually do live to 90+ years then your money will go down to reflect that. Are you sure they will allow you to take your money out so easily? How would they work out exactly how much money you had if you tried to take transfer out before you retire. Remember its not actually your individual pot of money its a collective pot of money. I would not take it for granted that it will be as good and as easy as you suggest. Anyway, ask me it's a joke of a pension, but again if you want to stay in it, and hope Royal mail will give you what you think you are entitled to when/if you try to transfer into a private pension then go for it.

You seem to have completely missed the point that you can transfer your share of the collective pot out to a personal pension or SIPP then use it in the same way that you would use your NEST pot, except, thanks to the higher employer contributions, it would almost certainly be larger than your NEST pot.