Next Year's pension increase for RMPP members

[robking]

The September rate of inflation is the month that is used to determine the rate of increase applicable from 1st of April next year.

Section A/B members pension increases are based on the rate of inflation measured by the Consumer Price Index (CPI) and there is no cap. The rate of CPI inflation announced today was 3.8% so section A/B members pensions will be increased by that amount from April 2026.

Section C members increases are based on the Retail Prices Index (RPI) but are subject to a cap of 5%. The RPI rate of inflation in September was 4.5% so section C members will receive this increase.

In 2023 & 2024 section A/B members received a larger pension increase than their section C counterparts because the previous September rate of inflation was higher than the 5% cap. However because RPI tends to be higher than CPI, when inflation is below 5% section C members tend to do better in the long term.

[renrag40]

While they paid 20% less each week in contributions than people in Section A/B.
Sounds like a good deal for Section Cers.

[heapsy]

While they paid 20% less each week in contributions than people in Section A/B.
Sounds like a good deal for Section Cers.

It would be, except the link between pay and pension was broken a few years back for section C members. Screwed over all the way. If people don't believe me, check your pensionable pay figure. Mine is only £16,099.77. Nothing like the figure we earn on 37 hours.

[renrag40]

While they paid 20% less each week in contributions than people in Section A/B.
Sounds like a good deal for Section Cers.

It would be, except the link between pay and pension was broken a few years back for section C members. Screwed over all the way. If people don't believe me, check your pensionable pay figure. Mine is only £16,099.77. Nothing like the figure we earn on 37 hours.

The link between actual pay and pensionable pay was broken for sections A, B and C in 2014. Since then your pensionable pay has risen by RPI from the previous September.
Due to the incompetence of the union this break has worked in our favour because the pay rises since 2014 have not kept pace with RPI ..... well done CWU you are bloody useless!!
For example, before the RMCPP started my pensionable pay was £15 per week HIGHER than my actual pay. I am still doing the same job on the same shift as I did in 2014...... but not for much longer.... thank God!!
Since the RMCPP started my pensionable pay is the same as my actual pay.
People in Section C will be paying more than they did in the previous plan because the Lower Earning Reduction was removed.

[heapsy]

You're right about paying more. But it's too late. The difference in the pension is massive. The changes have come too late for mid / late 50s somethings who wont be able to work til 67.

[RobertT]

The main reason section A/B members tend to have more pension is because they started the job earlier and so spent more time in the final salary scheme. Not necessarily because the accrual rates of that section are drastically better than C.

If you had the theoretical situation of two people joining on the same day, one in A/B and the other in C of either the final or average salary scheme, the difference in benefits accrued wouldn't be as big as some might think.

Plus, if C'ers had made the most of the scheme and joined Bonusplan from day one(or as near as possible), contribution rates would have been more equal to B and they would have built up a lump sum which they didn't have before.
Meaning C has the potential to be better, especially with the longer term benefit of RPI.

Where section C'ers lose out most is with the DBCBS, because that was a flat 19.6% of pensionable pay and that was reduced by the LED.

[renrag40]

The golden rule with pensions is the more you put in, the more you get out..... especially when the employer is contributing more than double what you are putting in.
The problem is most people have no interest in finding out about their pensions...... until they get close to retirement..... by which time, it is too late to do anything about it.

[baldrick]

The other golden rule for pensions is that every new pension scheme is worse than the previous one.

[renrag40]

Which is why your should start a SIPP as early as possible...... but as I know to my cost ...... that didn't occur to me 40, 30 and 20 years ago..... and I will be just 1 of the vast majority of RM employees who are presently in their 50s and 60s.
When I joined RM was a public service.
It had a final salary pension scheme that paid out at 60.
Privatisation was on no anyone's mind.
If I could give 1 piece of advice to anyone in their 20s and 30s employed by RM it would be... to open and consistently contribute to a SIPP...... don't trust RM to provide for your retirement because if they can wriggle out of it they will.

[NorthernBoy]

Which is why your should start a SIPP as early as possible...... but as I know to my cost ...... that didn't occur to me 40, 30 and 20 years ago..... and I will be just 1 of the vast majority of RM employees who are presently in their 50s and 60s.
When I joined RM was a public service.
It had a final salary pension scheme that paid out at 60.
Privatisation was on no anyone's mind.
If I could give 1 piece of advice to anyone in their 20s and 30s employed by RM it would be... to open and consistently contribute to a SIPP...... don't trust RM to provide for your retirement because if they can wriggle out of it they will.

This is really good advice. The tax benefits of investing into a Sipp are really good. Even if you can only afford a small amount each month it’s still worth doing. A decent sizes sipp along with your RM pension is a good plan.

[RobertT]

Yes, great advice!

I can say from personal experience that starting pension saving early is one of the best things you can do, as the money you save when you're younger has the longest time to grow and compound.

The more extra cash you can put aside the better, but even small amounts can make a difference over the longer term. And pensions are the most tax efficient vehicles to use.

[Wullie10]

Any pension increase could be potentially wiped out after the budget . So dont get to excited . It's all rumours and we'll just have to wait and see.