pension salary exchange

[harvey11]

i like many others got a royal mail pension salary exchange booklet in the post this week , after some digging on the internet i found out that if you opt in to this scheme royal mail can and will change your contracts

[datasaint]

i like many others got a royal mail pension salary exchange booklet in the post this week , after some digging on the internet i found out that if you opt in to this scheme royal mail can and will change your contracts

In what sense? Unless you sign a new contract then the terms of the existing one still stand.

Once the union deal ends in 2017 it'll be anybody's guess what'll happen though.

[hubbahubba]

More scaremongering from people who don't understand the facts.
The amount of paranoid people at work today who were saying things like this,and worse through fear of the unknown.

[blisterfeet]

i like many others got a royal mail pension salary exchange booklet in the post this week , after some digging on the internet i found out that if you opt in to this scheme royal mail can and will change your contracts

It actually says this in the leaflet. How it changes them I don't know.

[RobertT]

The contractual change is that they will be reducing your pay in return for another benefit. In this case RM will be paying your pension contributions instead of you.
PSE if you didn't already know, is also known as salary sacrifice. Lots more info can be found here: https://www.gov.uk/salary-sacrifice-and ... ts-on-paye" onclick="window.open(this.href);return false;
& here: http://www.pensionsadvisoryservice.org. ... -sacrifice" onclick="window.open(this.href);return false;

[pants123]

The contractual change is that they will be reducing your pay in return for another benefit. In this case RM will be paying your pension contributions instead of you.
PSE if you didn't already know, is also known as salary sacrifice. Lots more info can be found here: https://www.gov.uk/salary-sacrifice-and ... ts-on-paye" onclick="window.open(this.href);return false;
& here: http://www.pensionsadvisoryservice.org. ... -sacrifice" onclick="window.open(this.href);return false;

Having read this web site , it sounds a good thing to do,, is to go with it... but im a cynical person.. i cannot see any bad points in PSE...... or are they hiding the bad bits till your locked into this exchange scheme....


Very suspicious...

[k979aaa]

Have a look at these website's http://www.pensionsadvisoryservice.org. ... -sacrifice" onclick="window.open(this.href);return false; and http://www.aviva-for-advisers.co.uk/adv ... y-exchange" onclick="window.open(this.href);return false; But what gets me is why are Royal Mail PLC doing this for us there must be more in it for them in the long term after April 2016?

[plymouth3]

we save on employee nics and Royal mail save on employer nics.

[fishtank]

The only downside to PSE comes when you need to take any salary related benefits like IHR, VR or death benefit but at the moment the business has committed to using the pre-exchange rates so that shouldn't affect us...Whether that will change...anybody's guess...

[k979aaa]

we save on employee nics and Royal mail save on employer nics.

Yes they do as we do but on the Aviva website it has an option for more employer percentage of saving that presumably comes out of the employee's wages but wait what if the employer was not to pay the NI Contributions just like a pension holiday like royal mail did in the past! And left the fund under funded and made it's employee's pay the price with a longer retirement age and less pension at the end of it been there before and you would only have a piece of paper which showed you did not make the NIC's required at the end of the day!

[TrueBlueTerrier]

http://www.royalmailchat.co.uk/communit ... 27&t=70088" onclick="window.open(this.href);return false;

[RobertT]

Yes they do as we do but on the Aviva website it has an option for more employer percentage of saving that presumably comes out of the employee's wages

I may be missing something, but where does it say that?

but wait what if the employer was not to pay the NI Contributions just like a pension holiday like royal mail did in the past! And left the fund under funded and made it's employee's pay the price with a longer retirement age and less pension at the end of it been there before and you would only have a piece of paper which showed you did not make the NIC's required at the end of the day!

Are you talking about the RMPP or the state pension here? NI contributions go to the government to pay for the NHS, JSA, etc, etc. Have they ever not paid NI before? They have a legal requirement to do so, just like you have to pay it.

Yes they did take a pensions holiday inth the RMPP in the past which there were reasons for initially, although it did continue for too long which was one the reasons the final salary scheme closed in 2008. Although anyone with an interest in these things will know that the current career average pension will probably only last for a few more years anyway and everyone will then be in the defined contribution scheme.

If you’re referring to your state pension, as long as you earn enough to pay NI then you’re building up your entitlement to a state pension. Infact when we begin to pay NI at 12% in April 2016, we will actually be building up more state pension than we are at the moment. There is no fund with your name on it.

[5plusbonusball]

Might it mess about with people going for mortgages and benefits etc, showing a reduced income? Pensions are beyond me until I need to look into them, i'd rather it all went on lottery tickets each week , might get a better return.

[nataddick]

My view on PSE is totally positive and it is a 'no brainer' for employees to participate, save for the exceptions highlighted in the brochures etc.

Employees have quickly forgotten the contents of The Company's Pension Proposal document from June 2013 - I know most people would not have read it but I did because I am a 'geek' as far as pensions are concerned. I make no apology for being interested in my future income stream.

But a quick reminder from that document includes some 'key' paragraphs on Contracting Out that perhaps explain why RM is taking the action on PSE, not only for it's own benefit but also for the benefit of it's employees.

Contracting out

• The Government has announced that implementation of the single-tier Basic State Pension will begin in April 2016.This means the abolition of “contracting out” for pension schemes like the Plan will take effect from that date.

• Employees currently contracted out of the State Second Pension (and their employers) will pay higher National Insurance Contributions (NICs) as a result.

• The increased cost to the Company of these higher NICs has been estimated as £75 million every year from April 2016.The Government has proposed that employers will be given a “statutory override” to reduce pension benefits to recover these increased costs.

• If we reach an agreement with the unions of the type we are proposing, the Company will (subject to the conditions of our agreement) bear the increased cost of employer NICs without further changes to your pension benefits until we have concluded our next review.

Note: Employees who are members of the Plan will also pay an additional 1.4% higher NICs on relevant earnings once these changes to contracting-out come into effect.

Nothing was hidden or is sinister about the Plan's future and the fundamental point is that RM is trying to reduce the cost of the higher NIC's from April 2016 and prolong the pensions benefits on the current basis until the next review takes place in March 2018. PSE is simply a way of helping to reduce the cost of the higher NIC's.

I personally do not believe that the pension scheme will last in it's current form beyond the next review in 2018, as the demands on the then wholly privatised RM will be to cut overheads and the cost of providing pensions will be a priority target. I hope I am proved wrong !

[pad]

To be fair on this it's not Royal Mail or CWU's fault.....deep breath it's the Government. The change in pensions/NIC contributions means, in effect, that all POSS/POPS members will be faced with an increased National Insurance Bill next April (Thanks George Osborne....). What PSE means, in effect, that RM will pick up the difference and pay your Pension contributions for you and in return not have to pay the increased employers NI contribution as well (Win/Win?). However, that will mean the individual employee will also then not be paying 'full' National Insurance which may affect some current or future benefits. Given that most UK political parties are committed to 'means-testing' some or all benefits it may potentially include, amongst others, Second State Pension, Invalidity Benefit, Maternity/Paternity Benefit, Statutory Sick Pay and others. I would strongly urge individuals to consider their own personal circumstances, and if they believe it appropriate, consult a financial advisor since this might have some impact on the incomes to their household. For those people more concerned with not seeing a drop in their take home pay next April, and who are fully aware of the above then it's their own personal choice.