Royal Mail pension news and discussion.Please note the advise given in this forum is unofficial, please use the links we have for a more detailed response or see an independent financial adviser.
stephen500 wrote:One thing I am unsure about, the final salary part of our pension..will that still be calculated on an improved basis as our wage increases?
No, the proposal is that it will go up by inflation (RPI) up to a maximum of 5%.
Ie if we get a pay rise will we get 1/80 of that on top of an RPI rise?
Our pensions stopped increasing by 1/80th per year for Section A/B members and 1/60th for Section C members when the final salary plan closed in 2008 and was replaced by the average salary scheme. Since then our FS pensions have simply risen in line with wage increases while at the same time, building up blocks of CARE pension.
stephen500 wrote:One thing I am unsure about, the final salary part of our pension..will that still be calculated on an improved basis as our wage increases?
No, the proposal is that it will go up by inflation (RPI) up to a maximum of 5%.
Ie if we get a pay rise will we get 1/80 of that on top of an RPI rise?
Our pensions stopped increasing by 1/80th per year for Section A/B members and 1/60th for Section C members when the final salary plan closed in 2008 and was replaced by the average salary scheme. Since then our FS pensions have simply risen in line with wage increases while at the same time, building up blocks of CARE pension.
"Since then our FS pensions have simply risen in line with wage increases" That's what I mean ie There is a rise for wages + inflation??? I don't really class myself as unintelligent (others might) but it begins to baffle me!
stephen500 wrote: "Since then our FS pensions have simply risen in line with wage increases" That's what I mean ie There is a rise for wages + inflation??? I don't really class myself as unintelligent (others might) but it begins to baffle me!
I agree that's all starting to get a bit confusing, but the proposal is for increases in line with inflation alone and not linked to wage increases.
Robert you are very knowledgeable on pensions , however what ever way you look at it , Royal Mail when they were calling for EU State Aid to take on the pension deficit were not complaining about the performance of guilts then and they were poor.
As a result of the EU state Aid agreement 2 billion was left in the pension fund to cover the final salary link in the future. Less than a year later Royal Mail complain that due to the performance of guilts they do not believe they can afford to fund the final salary link going forward and now want to change it to RPI with a cap of 5%.
Plus the con continues by doing this they will release some of the 2 billion as surplus and this will fund any further pension contributions. This surplus also makes it quite attractive for private investors.
What's more they only want to guarantee that there will be no further changes to 2018.
What is happening stinks ! What Royal Mail and the Government are doing is using the money which was set aside to fund the final salary to further their desire to flog the company.
Thanks for the update dingo. I have just read an email with the LTB on the refusal.
I understand the RPI v RPI plus 1% position. What is not clear is how the £2.2 billion of funding referred to in the latest accounts is split. I imagine that the £0.2 billion relates to the PO and the balance of £2 billion is RM. The next question is how much is needed to fund an RPI only link - so that we can determine the extent of the differential between the two or how much RM will save with their original proposal.
It is still by no means clear where RM are getting their figure of an increase in contributions of £300 million p.a. from ? Are they now using RPI plus 2% or 3% and why has the assumption changed when since 2010 (as per the note 2 on page 33 in the accounts) they have been happy with RPI + 1% to fund the final salary link.
'2 RPI + 1% has been used by the RMPP Trustee in the valuation which was agreed in 2010 because it reflected long-term historical actual pay increases.'
If you are not confused - you don't understand the problem!
I've sent the form back to Chesterfield so I can find out at least what I'll get if I take my pension now 4 years early. Just about everyone I talk to is planing on taking their pension as soon as they can or already are taking it. I found out to day one of the local union blokes has already taken his at 55.
I'd still rather wait till I'm 60 but I'm not sure if thats going to be a wise move anymore.
Bloody hell, this is a smoke & mirrors attack by RM and associates, talk about baffle them with bullshit!!!
Pensions are deferred earnings, you agree 6% of your wages RM agree 17%, this is a long term contract that we have all entered into, but for some strange reason RM want to DIP into the latest pot (after the historical deficit ) was resolved, the 2.2 billion was set aside to keep the link to the final salary open, what right have RM to ask for this money back. Do I or you have the right to ask for a pension holiday or can I not pay in this week cos I can't afford it, this is a bloody disgrace and what Dingo is saying rings true, if ever there was summit to fight for THIS IS IT
The CWU has Trustees on the pension board to protect our interests. How on earth can they allow themselves to be associated with this latest set of proposals? Does anyone "in the know" know what OUR Trustees actually think of all this, and what are they doing about it?
Dee Plish wrote:The CWU has Trustees on the pension board to protect our interests. How on earth can they allow themselves to be associated with this latest set of proposals? Does anyone "in the know" know what OUR Trustees actually think of all this, and what are they doing about it?
I think there are nine trustees, four appointed by RM and counters, Three by the CWU, one independent and one for the CMA, Who some suggest might as well be appointed by management. So the independent and the CMA one may appear to some to give RM a majority!
Dee Plish wrote:The CWU has Trustees on the pension board to protect our interests. How on earth can they allow themselves to be associated with this latest set of proposals? Does anyone "in the know" know what OUR Trustees actually think of all this, and what are they doing about it?
This is the response I received recently
Thank you for your recent enquiry which the pensions helpline has passed to the Trustee office for a response.
The Pensions Agreement (with effective date 31 March 2012) resulted in the Government taking on the historic RMPP liabilities at that point in time, but benefits built up in the RMPP from 1 April 2012 (including those relating to pre-2008 ‘final salary' benefits) remain the responsibility of the Company.
We do not comment on speculation. However, the Trustee would communicate with members of the RMPP if and when there was something to say – such as in the event of a Company consultation.
Regards
Mark Rugman
Membership & Benefits Manager
Royal Mail Pension Plan
1 Coleman Street
London EC2R 5AA
Dee Plish wrote:The CWU has Trustees on the pension board to protect our interests. How on earth can they allow themselves to be associated with this latest set of proposals? Does anyone "in the know" know what OUR Trustees actually think of all this, and what are they doing about it?
This is the response I received recently
Thank you for your recent enquiry which the pensions helpline has passed to the Trustee office for a response.
The Pensions Agreement (with effective date 31 March 2012) resulted in the Government taking on the historic RMPP liabilities at that point in time, but benefits built up in the RMPP from 1 April 2012 (including those relating to pre-2008 ‘final salary' benefits) remain the responsibility of the Company.
We do not comment on speculation. However, the Trustee would communicate with members of the RMPP if and when there was something to say – such as in the event of a Company consultation.
Regards
Mark Rugman
Membership & Benefits Manager
Royal Mail Pension Plan
1 Coleman Street
London EC2R 5AA
This is what makes it so hard to understand as all of our pre 2008 pension is final salary?
Dee Plish wrote:The CWU has Trustees on the pension board to protect our interests. How on earth can they allow themselves to be associated with this latest set of proposals? Does anyone "in the know" know what OUR Trustees actually think of all this, and what are they doing about it?
This is the response I received recently
Thank you for your recent enquiry which the pensions helpline has passed to the Trustee office for a response.
The Pensions Agreement (with effective date 31 March 2012) resulted in the Government taking on the historic RMPP liabilities at that point in time, but benefits built up in the RMPP from 1 April 2012 (including those relating to pre-2008 ‘final salary' benefits) remain the responsibility of the Company.
We do not comment on speculation. However, the Trustee would communicate with members of the RMPP if and when there was something to say – such as in the event of a Company consultation.
Regards
Mark Rugman
Membership & Benefits Manager
Royal Mail Pension Plan
1 Coleman Street
London EC2R 5AA
Good grief I'm more confused then ever on this. I thought the whole point in handing over £28 BILLION quid to the government was to safe guard or pensions up till 1/4/12. The more I see on here the more it seems to me thats not the case. Its looking to me like they handed over the money all £28 BILLION of it and in return we got a big tube of KY gel.
It is really confusing and I don't think RM have explained it very well at all. As I understand it the problem doesn't affect the new "defined contribution" scheme which began in April 2008. It only affects the old final salary ("defined benefit") scheme which ended in April 2008.
Under the old scheme your pension will be calculated at 1/80th of your final salary for every year of service up to April 2008. That will be your final salary when you retire which could be this year, next year or 20 years time.
The cost of this pension up to April 2012 (effectively 1/80th of what your salary was at that date x your number of years service at April 2008) is covered by the Government.
The cost of the impact on your final salary of pay rises between April 2012 and the date you actually retire is the responsibility of Royal Mail.
So as a simple example, if you had 10 years service at April 2008 and your annual salary at April 2012 was £15,000 your notional pension to be guaranteed by the Government would be £15,000 / 80 x 10 = £1,875 pension per year
However, if when you actually come to retire in say 5 years time, your final salary as a result of pay increases was £17,000 then your pension would actually be: £17,000 / 80x 10 = £2,125 pension per year
Royal Mail would be responsible for ensuring that the RM Pension Fund could meet the obligation of the extra £250 p.a
As things stand RM is saying that it cannot afford to meet that obligation. Therefore it wants to limit the increase in the "salary" used to calculate your pension to RPI up to a maximum of 5%. Effectively it means your "final salary" for pension purposes won't be what you are actually earning when you retire.
This is what was proposed in the original pension changes but was one of the things that was dropped (with pressure from the CMA actually).
In order to achieve this, RM is also proposing to use the £2 billion surplus to support their final salary obligations - effectively wiping out the surplus.
That's basically it Brian, except that Section C members who started between April 1987 and April 2008 have their pensions worked out as 1/60th and their pensionable pay, reduced by the lower earnings deduction of £3,328. So your example only applies to those who were employed before April 1987 and are in Section A/B.
stephen500 wrote: "Since then our FS pensions have simply risen in line with wage increases" That's what I mean ie There is a rise for wages + inflation??? I don't really class myself as unintelligent (others might) but it begins to baffle me!
I agree that's all starting to get a bit confusing, but the proposal is for increases in line with inflation alone and not linked to wage increases.
Being that we often get a pay rise below inflation rate, would this really be such a bad thing?
