Royal Mail Collective Plan

[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, 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.

I think your missing the point, you don't even know what money you have in the pension as its not your individual pot of money, all you have is an estimate from Royal mail. So when you go to transfer that out I don't think it will be anywhere near as much as what you expect, also I would read the small print as I find it hard to believe Royal mail would allow members of that scheme to do what you suggest without some financial penalty to do it, just like Royal mail trustees have the right to refuse a member a lump sum at 57 if you want it. Honestly Royal mail are not that stupid when it comes to money, they have spent decades perfecting the art of shafting their employees, they will have covered the exact scenario you are talking about. My opinion, is I'd rather leave their pension and go to the NEST government run pension. I know exactly where I am and what I am getting and I don't need to rely on Royal mail allowing me to take it or not. Again if you want to take a chance with Royal mail and hope your plan goes as easy as you say, then go for it.

[milly]

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.

I think your missing the point, you don't even know what money you have in the pension as its not your individual pot of money, all you have is an estimate from Royal mail. So when you go to transfer that out I don't think it will be anywhere near as much as what you expect, also I would read the small print as I find it hard to believe Royal mail would allow members of that scheme to do what you suggest without some financial penalty to do it, just like Royal mail trustees have the right to refuse a member a lump sum at 57 if you want it. Honestly Royal mail are not that stupid when it comes to money, they have spent decades perfecting the art of shafting their employees, they will have covered the exact scenario you are talking about. My opinion, is I'd rather leave their pension and go to the NEST government run pension. I know exactly where I am and what I am getting and I don't need to rely on Royal mail allowing me to take it or not. Again if you want to take a chance with Royal mail and hope your plan goes as easy as you say, then go for it.

It depends who you think is the most trustworthy, Royal Mail or the Government?
In my opinion its neither.

[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!

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.

If you assume the pension and lump sum don't increase or decrease at all over and above the basic accrual rate of 1/80 and 3/80 of pensionable pay, you actually only need to draw your pension for around 11 months from 67 to get all your personal net contributions back.
If you pay into the booster, you get it all back(plus a little more) from the lump sum.

Whatever you get from the pension for the rest of your life(and your spouses) is then 'profit'. So you can't really lose out by being in the RMCPP.

I don't share your reasoning behind not getting value for money when transferring your RMCPP pot to a DC scheme. The value will be your share of the pot at the time and is clearly more likely to be worth more than Nest due to the much higher contributions.

If you'd rather take your chances with the government, that's your choice. But what makes you think they're not going to move the goalposts?
They've done it before and I'm sure they'll do it again.

Good luck.

[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.

If you assume the pension and lump sum don't increase or decrease at all over and above the basic accrual rate of 1/80 and 3/80 of pensionable pay, you actually only need to draw your pension for around 11 months from 67 to get all your personal net contributions back.
If you pay into the booster, you get it all back(plus a little more) from the lump sum.

Whatever you get from the pension for the rest of your life(and your spouses) is then 'profit'. So you can't really lose out by being in the RMCPP.

I don't share your reasoning behind not getting value for money when transferring your RMCPP pot to a DC scheme. The value will be your share of the pot at the time and is clearly more likely to be worth more than Nest due to the much higher contributions.

If you'd rather take your chances with the government, that's your choice. But what makes you think they're not going to move the goalposts?
They've done it before and I'm sure they'll do it again.

Good luck.

Well it's your choice, if you trust royal mail go for it. I know I left the collective plan and asked for a refund on my money since it has been less than 30 days since it started, and guess what I was told that because I was a founding member I was not allowed to get a refund and the 30 days did not apply. When I asked about when I was told this policy, they refused to tell me/ could not tell me. I cannot see any literature that states I needed to opt out of this plan before it started or I would not get a refund. I mean why would I opt out of something I had no idea about? Anyway, it's the kind of thing I expect from Royal mail, so I would suggest you expect the same kind of thing (make up a rule/policy) when you come to cash in your massive pot of unknown cash you believe you have build up. Anyway, good luck I hope I am wrong, but I will not be taking a chance, I like to know exactly what my cash is, where it is and that it stays with my next of kin if I am not around.

[RobertT]

Well it's your choice, if you trust royal mail go for it. I know I left the collective plan and asked for a refund on my money since it has been less than 30 days since it started, and guess what I was told that because I was a founding member I was not allowed to get a refund and the 30 days did not apply. When I asked about when I was told this policy, they refused to tell me/ could not tell me. I cannot see any literature that states I needed to opt out of this plan before it started or I would not get a refund. I mean why would I opt out of something I had no idea about? Anyway, it's the kind of thing I expect from Royal mail, so I would suggest you expect the same kind of thing (make up a rule/policy) when you come to cash in your massive pot of unknown cash you believe you have build up. Anyway, good luck I hope I am wrong, but I will not be taking a chance, I like to know exactly what my cash is, where it is and that it stays with my next of kin if I am not around.

RM first decided they were going to provide a CDC pension nearly 7 years ago as part of the 4 pillars agreement. It's taken that long to sort the legislation out.

They announced on 1st July 2024 that it was going to start on 7th October.
Although I actually came across the website the day before and announced it on here first.

They sent you information including what to do if you wanted to opt out, which is also available online.

It clearly says on page 47 of the RMCPP Handbook, that if you were working for the company on 7th October 2024, you can't get a refund of payments if you leave the scheme.

The information is out there – all you need to do is look for it, read it and then act on it.

[Dexydog]

I've decided to stay in the plan.
I understand people's concerns and voiced some myself.
When I leave in April I'll report on how easy it is (or not) to transfer out and how much is transferred in relation to how much is paid in.
Then we'll see.
I appreciate it's only 6 months in the plan but maybe will be indicative for everyone else moving forward.

[Postie Malone]

I've decided to stay in the plan.
I understand people's concerns and voiced some myself.
When I leave in April I'll report on how easy it is (or not) to transfer out and how much is transferred in relation to how much is paid in.
Then we'll see.
I appreciate it's only 6 months in the plan but maybe will be indicative for everyone else moving forward.

I, for one, would appreciate thatfeedback on the process. I will be leaving at the end of next summer and then transferring the CDC pension out to a SIPP.

[Dexydog]

No worries will post on here how it goes.

[dudek05]

I am leaving in 3 weeks and will then apply to transfer to a SIPP

[Dexydog]

Please could you let us know how you get on?
Processes, timescales etc. would be just helpful.

[mr hil.]

I am leaving in 3 weeks and will then apply to transfer to a SIPP

Did you transfer out? Could you please update us as to how it went

[dudek05]

Went fine. I transferred to a SIPP with Hargreaves Lansdown. I initiated the transfer by applying to HL and just had to sign and return paperwork RM sent in post.

[pieoftheday]

I left a few weeks ago so decided to take what was in the Collective plan its around £2500 lump sum and £550 ish a year, seems ok considering it hasn't been going very long