Pension rumours

[RobertT]

Personally I think there's a certain amount of scaremongering going on here. We don't know for sure what's going on yet but the way I see it, is that the most likely outcome is that the final salary element of our pensions will be deferred in the same way as if we're to leave the company.
Our 'closing' pension value would then go up each year by inflation instead of being linked to earnings. I'm not sure whether the increases would be by RPI or CPI, but as our pay rises in recent years have generally been lower than inflation, personally I don't think we have too much to worry about and there's certainly no reason to transfer out.
In my opinion these rumoured changes are more about making the company more attractive for privatisation and as a viable company going forward. I would also assume that the inflation link will be paid for by the government under the April 2012 deal that saw them take on it's assets and liabilities.

What happens to the career average scheme under privatisation is a different question but I wouldn't be surprised to see that go in due course.

For a bit more in on what happens when a final salary pension closes see this:
http://www.ft.com/cms/s/0/7b0749c8-69fa ... z2Rl8LBRK4" onclick="window.open(this.href);return false;

[fishtank]

Some basic questions need to be answered.

Is the Royal Mail Pension (post-March 2012) actually in deficit?

If so how can a fully funded pension in March 2012 find itself in trouble barely 12 months later?

Was it left underfunded,did someone underestimate the liabilities or have the investment decisions been so catastrophic(again) that despite a stable stock market it has caused a serious deficit within 12 months?

Are the link to final salary and associated benefits ring fenced from the post 2012 overall pension fund?

If they are which liability is it that is allegedly unaffordable or is it both?

Is there any truth in the rumour that Royal Mail's 17% employers contribution would have to increase to 28% to fill this hole?

[stephen500]

Some basic questions need to be answered.

Is the Royal Mail Pension (post-March 2012) actually in deficit?

If so how can a fully funded pension in March 2012 find itself in trouble barely 12 months later?

Was it left underfunded,did someone underestimate the liabilities or have the investment decisions been so catastrophic(again) that despite a stable stock market it has caused a serious deficit within 12 months?
(If it is then it must be because bonds are so bad due to government quantitative easing. A double whammy by the government!)

Are the link to final salary and associated benefits ring fenced from the post 2012 overall pension fund?

(I would think so. They think they can alter going forward, but retrospective no.)

If they are which liability is it that is allegedly unaffordable or is it both?
(annoying thing is liabilities go up and down. As the markets improve the liabilities must improve? Markets go down then worsen)

Is there any truth in the rumour that Royal Mail's 17% employers contribution would have to increase to 28% to fill this hole?

(As far as I know defined benefits, we pay for the up and down. Final salary? who knows)

What we need is some real imformation.
What we have a present is a bit of leaking combined with rumour.
Just want to get to the finish line as soon as possible!

[heapsy]

I have tried to do some research on changes to pensions. An article (Q and A) from the Daily Telegraph suggests that existing benefits cannot be retrospectily adjusted. (Unless of course, the law is changed!) So it looks highly unlikely that benefits acrured can be changed. More likely that the final salary scheme going forward could have the link withdrawn. However it appears that Royal Mail may protect the next five years. The article in the Telegraph reads "Is my existing pension affected by these changes?
No, all pension benefits accrued to date are protected. So, for example, if you have worked for the company for 20 years and for each year have earned a fixed proportion of your salary to date as a pension, this will still be paid at retirement. However, it does mean that from now any future benefits won't be dependant on your salary, but what is paid into the new defined contribution plan." So fingers crossed if you are not too far from your pension you willl be ok. Well that's what I am hoping!

Interesting post. Any chance of posting the link? Cheers.

[stephen500]

I have tried to do some research on changes to pensions. An article (Q and A) from the Daily Telegraph suggests that existing benefits cannot be retrospectily adjusted. (Unless of course, the law is changed!) So it looks highly unlikely that benefits acrured can be changed. More likely that the final salary scheme going forward could have the link withdrawn. However it appears that Royal Mail may protect the next five years. The article in the Telegraph reads "Is my existing pension affected by these changes?
No, all pension benefits accrued to date are protected. So, for example, if you have worked for the company for 20 years and for each year have earned a fixed proportion of your salary to date as a pension, this will still be paid at retirement. However, it does mean that from now any future benefits won't be dependant on your salary, but what is paid into the new defined contribution plan." So fingers crossed if you are not too far from your pension you willl be ok. Well that's what I am hoping!

http://www.telegraph.co.uk/finance/pers ... QandA.html" onclick="window.open(this.href);return false;

Interesting post. Any chance of posting the link? Cheers.

[fishtank]

The problem we have and the reason we need some answers quick is because our situation is so messed up with Section A/B,Secton C,Final Salary,Career Average,Pre 2008,Pre 2010,Pre 2012,Government Intervention,NRA 60,NRA 65..... that our issues don't fit any "off the shelf" advice on pensions.
We need answers from experts in Royal Mail pensions and that's going to be difficult.

I even think that being able to take your pension at 60 without reduction on pre-2010 service and keep working and keep contributing to the pension scheme is pretty much a Royal Mail exclusive deal.

[RobertT]

I even think that being able to take your pension at 60 without reduction on pre-2010 service and keep working and keep contributing to the pension scheme is pretty much a Royal Mail exclusive deal.

It's quite commonplace these days and is also known as flexible retirement.

[nataddick]

I agree with your view Stephen. Dave Ward touches on the fact that there will be another 'attack' on pensions in his interview on SKY at approx 7mins 25sec in. Thought Mr Fallon looked very uncomfortable and Dave Ward got his points over quite well. However, the CWU are not telling the members exactly what is going on as far as pensions are concerned? Hopefully now the conference is over, some news will be forthcoming soon.

http://news.sky.com/story/1084596/govt- ... -mail-sale" onclick="window.open(this.href);return false;

[Glenno]