Royal Mail’s new pension scheme falls 5% in first six months

[nutcracker]

https://www.ft.com/content/a819f1bf-f4f ... d2342b1214

Behind a paywall unfortunately, but expect to see more of these headlines.

For me the standout quote

“ The results showed that 77 per cent of the fund, which had £192mn of assets at the start of April, was invested in global equities that follow a benchmark designed for investors who want their portfolios to match a goal of limiting global warming to 1.5C”

Global equities are up massively over the last few years? Is any other company pension fund in the UK making that kind of sacrifice on behalf of its patrons?

[toonshola]

Yet another scam promoted by Ward, Walsh and the cronies of the CWU. Everything they touch turns to s**t.

[gfte]

http://archive.today/ZKHN5

Royal Mail’s new pension scheme falls 5% in first six months
Pioneering CDC product underperforms benchmark index by a percentage point
A Royal Mail employee in a red and black uniform sorts mail at the back of a delivery van displaying the Royal Mail logo.
The Royal Mail Collective Pension Plan was launched in October last year after six years of planning © Daniel Harvey Gonzalez/In Pictures/Getty Images
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Mary McDougall in London
Published4 hours ago
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Royal Mail’s new pension scheme, the first of its kind in the UK, fell almost 5 per cent in its first six months, raising questions over the level of future payouts for its more than 100,000 members who include postal workers.


The Royal Mail Collective Pension Plan, a collective defined contribution (CDC) scheme launched in October last year after six years of planning, dropped 4.6 per cent by the end of March, compared to a 3.6 per cent decline in its benchmark index, according to its results seen by the Financial Times.


The results come as the government wants to encourage wider take-up of such schemes, which offer a halfway house between traditional defined-benefit pension plans that offer predictable payouts, and defined-contribution plans, where income is based on contributions and investment performance.


The postal group’s CDC was the first to be set up after the schemes were allowed in 2021 and its performance will be closely watched by other employers. The government hopes the pooled products will boost incomes for retirees and channel savings into a wider range of assets.


But people familiar with Royal Mail’s CDC, which has 110,000 members, stressed that it was too early to draw conclusions about payouts in the long term. The fund was just getting started, and flows and timing had an outsized impact on returns, they added.


A spokesperson for the CDC said it was “designed to hold long-term growth investments that allow for short-term volatility” and that it had delivered “positive” returns since the end of March.


The results showed that 77 per cent of the fund, which had £192mn of assets at the start of April, was invested in global equities that follow a benchmark designed for investors who want their portfolios to match a goal of limiting global warming to 1.5C.


The fund had 9 per cent in small-cap equities and another 9 per cent in emerging market stocks. BlackRock, the outsourced chief investment officer for the scheme, declined to comment.


CDC members participate in a pooled scheme and are offered a target return around which they can plan their retirements. But returns are not fixed and companies are not obliged to make up any funding shortfalls.


John Ralfe, an independent pensions consultant, said the “real issue” was a lack of clarity about how performance — up or down — translates to a change in target pensions. He said that Royal Mail CDC must be “entirely transparent” about its calculations and the impact on different age groups.


Royal Mail plans to update scheme members on their target pensions and how these are calculated in the spring.


Pensions minister Torsten Bell told the Financial Times in October that new regulations allowing multiple private-sector employers to join collective defined contribution schemes could boost retirement incomes by 25 to 60 per cent.


While it was “too early to say” if CDC products would become the main option across the UK’s £600bn workplace defined-contribution market, “we should be confident that this will play a significant part in our future pension system”, Bell said.


Royal Mail’s parent company, International Distribution Services, was taken over last year by EP Group, headed by Czech billionaire Daniel Křetínský, who vowed to improve the financial strength of the postal service. The businessman is known for his investments in UK supermarket chain J Sainsbury and football club West Ham United.

[RobertT]

Anyone wanting to see the full report and accounts, where the FT presumably got this info from, can find it in the 'documents & forms' section of the RMCPP website.

[twoloops]

Unbelievable ……. investing our pensions contributions into global warming friendly stocks

[TopperGas]

https://www.ft.com/content/a819f1bf-f4f ... d2342b1214

Behind a paywall unfortunately, but expect to see more of these headlines.

For me the standout quote

“ The results showed that 77 per cent of the fund, which had £192mn of assets at the start of April, was invested in global equities that follow a benchmark designed for investors who want their portfolios to match a goal of limiting global warming to 1.5C”

Global equities are up massively over the last few years? Is any other company pension fund in the UK making that kind of sacrifice on behalf of its patrons?

Global equities have risen by over 10% it's irritating employees can't choose themselves if they want their pension fund to be invested in normal equities rather than green ones. Who are the fund trustees, is Ed Miliband one of them?

[tramssirhc]

The only guaranteed part of the CDC is workers contributions. The CWU peddled this scheme as a way to get workers a defined benefit. As usual with Ward and the useless CWU executive they've accepted the crumbs. Commentators on here will argue it's early days. Workers face the real prospect of getting nothing back from the original DC scheme and now getting nothing back from the CDC. Let's be clear the only collective part of the CDC is the workers contribution. And never forget that Ward and Walsh are getting a defined benefit, final salary, pension paid for by workers. The likes of Ward care so little about unionism that they've bankrupt the CWU by refusing to put the officers on a DC scheme like the rest of us.

[NWpostie]

I wouldn't panic, the stock market do have dips they also rise in long term steady investment is how you play the game not get rich quick bucks that's a high roller risk with big failures, only invests in appreciating assets, properties, bonds that's how you do it, play the long game.

[tramssirhc]

I wouldn't panic, the stock market do have dips they also rise in long term steady investment is how you play the game not get rich quick bucks that's a high roller risk with big failures, only invests in appreciating assets, properties, bonds that's how you do it, play the long game.

I would panic. The avc scheme for the CDC saw workers lose money in management costs because the avc scheme has not performed well enough. Itc not unreasonable to argue that the CDC scheme will fail.

[Jaggs]

I wouldn't panic, the stock market do have dips they also rise in long term steady investment is how you play the game not get rich quick bucks that's a high roller risk with big failures, only invests in appreciating assets, properties, bonds that's how you do it, play the long game.

I would panic. The avc scheme for the CDC saw workers lose money in management costs because the avc scheme has not performed well enough. Itc not unreasonable to argue that the CDC scheme will fail.

Where are you getting that the AVCs have lost money?Since the scheme launched all of the options available to invest your AVCs in have had positive returns.

[Jaggs]

I would say that the headline is a bit misleading. Yes the schemes investments are down but it was in a 6 month period where all global equities were down. It was made worse by the ESG options taken by the scheme though.

[NWpostie]

I wouldn't panic, the stock market do have dips they also rise in long term steady investment is how you play the game not get rich quick bucks that's a high roller risk with big failures, only invests in appreciating assets, properties, bonds that's how you do it, play the long game.

I would panic. The avc scheme for the CDC saw workers lose money in management costs because the avc scheme has not performed well enough. Itc not unreasonable to argue that the CDC scheme will fail.

Where are you getting that the AVCs have lost money?Since the scheme launched all of the options available to invest your AVCs in have had positive returns.

I choose Growth as my AVC investment option and it seems to have paid off.

[RobertT]

The only guaranteed part of the CDC is workers contributions.

The lump sum is guaranteed and you're likely get all your net contributions back via it. More if you pay into the booster.

The CWU peddled this scheme as a way to get workers a defined benefit. As usual with Ward and the useless CWU executive they've accepted the crumbs.

RM originally wanted to put everyone into a DC scheme from April 2018. The CWU negotiated the CDC/RMCPP via the 4 Pillars agreement, which the membership voted for unanimously.
It isn't a DB scheme and has never been put across as such.

Workers face the real prospect of getting nothing back from the original DC scheme and now getting nothing back from the CDC.

Only someone who doesn't know how the schemes or stock markets work, would think that.

And never forget that Ward and Walsh are getting a defined benefit, final salary, pension paid for by workers. The likes of Ward care so little about unionism that they've bankrupt the CWU by refusing to put the officers on a DC scheme like the rest of us.

The CWU final salary scheme actually closed back in 2018 I think, and changed to an average salary version. The last time I heard it was only around 85% funded.

The 'rest of us' are on a CDC scheme, which is clearly different to DC.

I would panic. The avc scheme for the CDC saw workers lose money in management costs because the avc scheme has not performed well enough. Itc not unreasonable to argue that the CDC scheme will fail.

Take a look here to see how the AVC funds have actually performed: https://digital.feprecisionplus.com/cor ... ory=4rmc23

[scotchy1962]

Good god RobertT don't be going against trams, he only spreads the truth on here and never ever makes things up!!
Now that's the sarcasm out of the way, well done RobertT let's see if he attacks you as a CWU lackie or something similar because you destroyed his accusations.
Hard to argue with the truth.

[ROSSCO]

Ignore tramssihc he clearly doesnt know what he's talking about.
My AVC is in growth fund and has started fantastic.
Our CDC scheme will be fine check back in on it in 3 -5 yrs.