One year of the collective pension plan

[RobertT]

Off topic a bit I retired last December due to to ill health received my nra 65 early with no penalties what would happen to my collective pension plan had about £120 in it

See page 46 of the Handbook(via the website).

[TopperGas]

Any idea when the annual pension statements are due to be issued if the plan has now passed it's first anniversary? As apart from requesting a Transfer value there seems no way of checking what's in our funds nor the annual returns on our investments?

[NWpostie]

Is there a dedicated CDC pension website where I can look this up ?


Thanks.

https://rmcollectiveplan.com/

You should have been sent login details last year.

Possibly I can't seem to find it so I'm emailing them to resend it.

[Jaggs]

Any idea when the annual pension statements are due to be issued if the plan has now passed it's first anniversary? As apart from requesting a Transfer value there seems no way of checking what's in our funds nor the annual returns on our investments?

With this scheme I don't think you will get an individual fund value as it's about providing a lump sum and an income in retirement. However I do hope in an annual report the trustees will show how well investments are doing and whether they are meeting the benchmark that has been set of matching the returns of the FTSE All World Index.

[RobertT]

Every year there will be a valuation of the scheme as a whole, to decide whether your pension benefits will go up or down. I don't know how long that will take, but it may well be a few months.

When that's been done, I'd expect they'll provide some basic info such as the investments have done well or not so well this year and therefore your pension will increase or decrease by x%.

But the annual report and accounts should go into more detail concerning how much of the pot is invested in each type of investment(equities, bonds, etc) and what their returns were. Just as the RMPP R&A's do now.

In the meantime, I assume the figures on the website relate to the core accrual value of 1/80th for the pension and 3/80ths for the lump sum?

The transfer value represents your individual share of the overall pot and what's deemed to be the cost to the scheme of providing your benefits.

[TopperGas]

How can anybody plan for retirement if all the figures quoted just seem guesstimates? I assumed the transfer values shown were a reasonable accurate valuation of the plans value, not just an estimation what it might be worth?

[Jaggs]

How can anybody plan for retirement if all the figures quoted just seem guesstimates? I assumed the transfer values shown were a reasonable accurate valuation of the plans value, not just an estimation what it might be worth?

I don't think they are guesstimates. The lump sum increases each year are guaranteed and the annual income is accurate plus or minus the annual adjustments. The transfer value should be a good estimate but it should not be relied upon as the pension is setup for you to take the income and lump sum rather than the transfer value.

[mr hil.]

It's relatively straight forward to plan for your retirement with the CDC you get 1/80th of your pensionable salary added to your annual pension for each year until retirement. This amount will be adjusted slightly each year depending on the investment performance of the funds but they should outperform inflation over the longer time but could go down ( I don't expect any large losses though based purely on every other pension I have)
As your salary rises so will your 1/80th.

This year the average full time postie (legacy contract) would have earned very roughly £360 annual pension they will continue to earn an equivalant amount each year plus 1/80th of any pay rise (not exact but a simplified explanation) These yearly amounts will be adjusted based on performance but will not probably change too much

So if you have 10 years to retirement a simple figure would be £360 X 10 = £3600 to be paid to you every year in retirement ( It will be revalued as before so will probably at least match inflation but it could go down too but again not by any great amount.

The lump sum will be about three times your annual pension (3/80th) Probably more because any annual increase applied based on the previous year investment peformance is guaranteed and will never be reduced.

The amount you and royal mail pay into the pension has no direct relationship with how much you will get back (not like to cash balance scheme where the monies paid in are yours to withdraw)

The contributions paid each week are what the pension fund managers will invest on your behalf collectively, with an expectation of earning a healthy return which will fund the increases they expect to be able to pay everybody.

[TopperGas]

Thanks for clarifying the position, I assumed it was a money purchase scheme rather than a defined benefits type scheme, although not sure how they can offer the later when there's always the risk of a stock market crash.

[RobertT]

Thanks for clarifying the position, I assumed it was a money purchase scheme rather than a defined benefits type scheme, although not sure how they can offer the later when there's always the risk of a stock market crash.

It's a cross between the two!

The pension element is classed as DC/money purchase but aims to provide similar benefits to a DB scheme. However, if there's not enough money in the pot, your pensions will potentially go down.
There's no liability on RM whatsoever, other than to pay in their agreed percentage.

The lump sum(inc booster) is basically the same as the DBCBS that ran from 2018 to 2024, and the amount that goes in is guaranteed by RM, as is any annual bonuses once added.