the impending vote

Martin Walsh · Post by **Martin Walsh** » 12 Feb 2018, 13:12

Remember the DBCB scheme is designed to be a short terms scheme and designed to produce a lump sum only.

The thinking behind the scheme is that the vast majority of RMPP members at the point they take their pension benefits , take a tax free lump sum as part of their benefits and the majority the maximum lump sum - 25% of the value of their pension.

The DBCB scheme is designed to reduce or eliminate the requirement for ex RMPP members to have to convert / commute pension to lump and therefore take a smaller pension as the DBCB lump sum can be used for this purpose.

The DB element of the DBCB is that the business will guarantee that the minuimn return in the form of a lump sum will be the return of the employees and employers contributions regardless of investment performance , provided the lump sum is taken with the scheme rules.

Royal Mail original proposal was that the lump sum could only be taken with RMPP age 65 for the benefits for the guarantee to apply. During negotiations Royal Mail amended the proposal to also offer this guaranteed return if the DBCB lump sum is taken age 60.

However the guarantee only applies if the lump sum is taken at either 60 or age 65 , if the member takes the lump sum at any other stage eg as part of an early payment the guarantee does not apply .Remember this only applies to the lump sum.

Post by **RobertT** » 12 Feb 2018, 14:46

Just to clarify for anybody who's confused......

dingo wrote:It is important individuals realise all your service before 2008 in the final salary scheme is payable with no deductions when you reach 60 and the CARE scheme which replaced the final salary scheme in 2008 and will close on the 31st March you can receive age 65 without any deductions.

What is payable at 60 without reductions is actually your final salary pension upto 2008 plus the first 2 years of the CARE pension.
What is payable at 65 without reduction is the CARE pension from 2010 to 2018.

The new scheme which is subject to secondary legislation but both Royal Mai and the CWU are confident they will receive it soon has 67 normal retirement age all be it there is an option to pay an extra 1% and Royal Mail will match with 1% which will enable an individual to possibly go at 65 without deductions.

Remember the 67 only applies to the years you do after 31st March 2018.

According to the agreement, the NRA of 67 actually applies to the CDC scheme when that is introduced.
The DBCB scheme from April 2018 will provide a lump sum along with your already accrued RMPP benefits and can still be taken at either 60 or 65 unreduced.

regalia25 · Post by **regalia25** » 12 Feb 2018, 15:21

I know this is yet another pension question, of which there are many, but I would be grateful for people's opinion.
If someone is currently on the DC plan, enjoying all the pension freedoms that that gives, and then pays into the DBCB scheme, for say 3 years while they sort the new scheme out. When can the DBCB benefits be taken ? I can't believe they are going to expect us to vote on something that has so many questions yet to be answered.

thegreatestfreddy · Post by **thegreatestfreddy** » 12 Feb 2018, 15:24

RobertT wrote:Just to clarify for anybody who's confused......

dingo wrote:It is important individuals realise all your service before 2008 in the final salary scheme is payable with no deductions when you reach 60 and the CARE scheme which replaced the final salary scheme in 2008 and will close on the 31st March you can receive age 65 without any deductions.
What is payable at 60 without reductions is actually your final salary pension upto 2008 plus the first 2 years of the CARE pension.
What is payable at 65 without reduction is the CARE pension from 2010 to 2018.

The new scheme which is subject to secondary legislation but both Royal Mai and the CWU are confident they will receive it soon has 67 normal retirement age all be it there is an option to pay an extra 1% and Royal Mail will match with 1% which will enable an individual to possibly go at 65 without deductions.

Remember the 67 only applies to the years you do after 31st March 2018.
According to the agreement, the NRA of 67 actually applies to the CDC scheme when that is introduced.
The DBCB scheme from April 2018 will provide a lump sum along with your already accrued RMPP benefits and can still be taken at either 60 or 65 unreduced.

Spot on Robert ... thanks

With regard to the DBCB payout what is actual ‘Pensionable pay’ and is there a LEL? Or other Reduction when calculating what constitutes ‘pensionable pay’ ... ??

Post by **RobertT** » 12 Feb 2018, 16:28

regalia25 wrote:I know this is yet another pension question, of which there are many, but I would be grateful for people's opinion.
If someone is currently on the DC plan, enjoying all the pension freedoms that that gives, and then pays into the DBCB scheme, for say 3 years while they sort the new scheme out. When can the DBCB benefits be taken ? I can't believe they are going to expect us to vote on something that has so many questions yet to be answered.

That’s a good question and one that hasn’t been answered in the agreement or the Q&A’s on myroyalmail, as far as I know. But we are all supposed to be getting booklets telling us all the details in due course.

Post by **RobertT** » 12 Feb 2018, 16:28

thegreatestfreddy wrote:Spot on Robert ... thanks

With regard to the DBCB payout what is actual ‘Pensionable pay’ and is there a LEL? Or other Reduction when calculating what constitutes ‘pensionable pay’ ... ??

For those currently in section C, pensionable pay will stay as now for the DBCB scheme, so will continue to have the LEL of £3,328 taken off earnings.

The plan for the CDC scheme, is that all pay will be pensionable for everyone.

thegreatestfreddy · Post by **thegreatestfreddy** » 12 Feb 2018, 19:20

RobertT wrote:
thegreatestfreddy wrote:Spot on Robert ... thanks

With regard to the DBCB payout what is actual ‘Pensionable pay’ and is there a LEL? Or other Reduction when calculating what constitutes ‘pensionable pay’ ... ??
For those currently in section C, pensionable pay will stay as now for the DBCB scheme, so will continue to have the LEL of £3,328 taken off earnings.

The plan for the CDC scheme, is that all pay will be pensionable for everyone.

Thanks for your continued knowledge and responses in this complex subject...

I've never really understood LEL ... how has that come about to always be subtracted from earnings before any calculations are made... ??

Thanks in advance... freddy

Celgar · Post by **Celgar** » 12 Feb 2018, 20:10

I think the LEL rule comes from the government although I might be incorrect.

Post by **RobertT** » 13 Feb 2018, 05:39

Section C was introduced for new employees in 1987 and the LEL has always been part of how our pensions are worked out, unlike section B which has never has that deduction! I’m not quite sure about the exact rationale, but I assume the reason is because it was cheaper for RM.

The LEL set by the government relates to how much a person can earn before their pay is assessed for National Insurance purposes and is currently £5,876, going up to £6,032 for 2018/19.

Up to 1999 the LEL for section C pensions rose along with the governments figure, but RM then decided to freeze it at the level at the time, which was £3,328. So as time passed and our wages increased, the LEL effectively became a smaller reduction from our pay in percentage terms, and our pensions became more valuable as a result