15 December 2019
myroyalmail is updated daily

Personal Illustration Q&As

This page relates to the personal illustrations sent to every active Plan member as part of the member consultation on the future of the Royal Mail Pension Plan after March 2018. It includes:

  • Questions and Answers
  • Terms used in the personal illustrations   

QUESTIONS AND ANSWERS

1. I have lost my personal illustration (or I never received it). Can I have another one?

Yes. Please phone the Pensions Consultation Helpline on 0345 850 0081 and request one. You will be asked to confirm your name, address, date of birth and payroll number.

2. I think my personal illustration is wrong or incomplete. Can I have another one?

Please phone the Pensions Consultation Helpline on 0345 850 0081 and explain why you think the statement is wrong or incomplete. If an error is identified, we will send you a revised version.    

3. Can I get some help from an independent financial adviser to help me understand the illustrations?  

Yes, you can contact an independent financial adviser to help you understand the illustrations. You will be responsible for the cost of any advice.  

4. Why is pay different to pensionable pay?

Changes took place to the Royal Mail Pension Plan on 1 April 2014 which meant that since that date, actual pay and pensionable pay are different. The changes made from 1 April 2014 were:

  1. Actual pay and pensionable pay were ‘de-linked’ from each other and increase independently. 
  2. For pension benefit and contribution purposes, basic pensionable pay (after deduction of the LED for Section C members) is treated as increasing in line with retail price inflation, subject to a maximum of 5% a year and a minimum of 0% a year (actual pay awards continue to be made in the usual way).
  3. Any incremental pay awards while members stay in their 31 March 2014 “Pay Grade Grouping” (or PGG for short) flow through to increase both Career Salary Defined Benefit (CSDB) pensionable pay and Final Salary pensionable pay.
  4. Any promotional pay awards if members move to a higher PGG than applicable at 31 March 2014 flow through to increase CSDB pensionable pay but do not increase Final Salary pensionable pay.
  5. Payslips from April 2014 onwards show the pensionable pay on which your pension contributions are calculated.
  6. Pension contributions in respect of basic pensionable pay increase on 1 April each year (based on the retail price inflation figure at 30 September of the previous year) but actual pay remains the same until your next pay award is implemented. Pensionable allowances (and associated contributions) increase when next reviewed.

5. Why are you including state pension in the illustrations?

Since April 2016, you and the Company have been paying increased National Insurance Contributions following the ending of contracting out and you are now fully participating in the new State Pension Scheme. Prior to April 2016, you were having part of your state pension provided by the Royal Mail Pension Plan, but you are now potentially earning additional state pension benefits on top of your Plan benefits. Therefore, it makes sense to show the impact of the proposal on your total pension provision, including your estimated state pension. We have also provided an estimate without the state pension so that you can see the changes to your Plan benefits.

6. I am a section A/B member. In the box on page one of my personal illustration, the words ‘a year’ are included after the figure for ‘my total DB lump sum at 31 March 2016’. Is this a mistake? 

Yes. We are sorry for any confusion this has caused. The lump sum would be a one-off payment, so please disregard the words ‘a year’ when reading the figure. Please note this is only relevant to the personal illustrations sent to section A/B members. All other personal illustrations sent to colleagues’ home addresses do not include this error. 

7. Why does my statement show no difference in the estimated pension in the ‘before’ and ‘after’ numbers?  

This may be because contributions cease after 45 years of pensionable service. If you reach 45 years of pensionable service before 31 March 2018, then the proposal will not affect your benefits at all.

8. Why is my estimated pension, including notional state pension if I stay in service until age 60, only slightly different to the amount I will have built up to 31 March 2018? I am thinking of taking my pension early if what I build up in the future is going to be so low.

The illustration assumes you take ALL your pension benefits at age 60. We have included an early retirement reduction in the estimates.  If you take your Age 65 benefits early at age 60, they will be reduced for early payment. So, if there is only a small difference between the DB figures earned to date and the estimated benefits at age 60, this does not mean that your potential future benefits will be low, just that early retirement reductions have been included in those estimates.

On the other hand, there is no reduction included in the Age 65 benefits shown in the illustration because there is no early retirement reduction.

Remember that the benefits normally payable at age 60 are the benefits you have built up to 31 March 2010; and the benefits normally payable at age 65 are those that built up after 1 April 2010.

If there is a relatively short period of time to go until you turn 60, there may also not be much difference between the DB figures earned to date and the estimated benefits illustrated at age 60.

Please note that taking your pension benefits early will reduce your future potential pension benefits. As the proposal would only affect the build-up of future pension benefits from 1 April 2018, there is no advantage in taking your pension early to avoid any changes brought about by the proposal. In fact, taking your pension benefits early could disadvantage you in the future by reducing your ability to build up additional pension benefits.

9. My Trustee benefit statement shows a higher cash lump sum than my personal illustration. Why is this? Can Section B member still take a higher cash sum than the standard entitlement?

The Trustee statement shows the maximum lump sum possible (around 25% of your pension benefits) under current Inland Revenue rules. The personal illustration is designed to show the possible impact of the proposal on your benefits and is not intended to be used as a retirement benefits quotation. For this reason, it does not include maximum tax free cash figures. Under the proposal, both Section B and C members would still have the option in the future to take as much cash as possible from their pension benefits. There would be no change to the general rule that the maximum cash sum currently available from the Plan is around 25% of the total value of the benefits being taken

10. Why is the supplement missing from my personal illustration?

Although the supplement is part of the pension benefits earned to date for Section C members, it is not paid until you leave Royal Mail. As the personal illustration assumes that you remain in service to age 65, the supplement has not been included in the personal illustration numbers. However, it would be paid if you leave service before your state pension age.


TERMS USED IN THE PERSONAL ILLUSTRATION

My membership reference number

This is your Royal Mail Pension Plan (RMPP) number held by the Pensions Service Centre. It is not the same number as your payroll number (which is shown on your payslip).

Section of the Plan

Section A/B members joined the Plan before 31 March 1987. Section C members joined after 1 April 1987. If you want more information on each section of the Plan, please visit www.royalmailpensionplan.co.uk or call the Pensions Helpline on 0114 241 4545.

My ‘Projected State pension’ date

This date is set by the Government and not by Royal Mail. It is the date from which your State pension starts to be paid. You can find out your projected State pension date at www.gov.uk/check-state-pension. You can take your RMPP pension benefits at a different date to your State pension date.

Your total DB pension at 31 March 2016

This information is taken from your RMPP Annual Benefit Statement issued to you in early September 2016. It is the total Age 60 and Age 65 benefits built up to 31 March 2016 but does not include any benefit you may build up after that date. It excludes the pension supplement for Section C members. If you are already receiving your Age 60 benefits then the figure will be Age 65 benefits only. If you have any questions as to how this figure has been calculated, you should contact the Pensions Helpline on 0114 241 4545.

Your total DB lump sum at 31 March 2016 (Section A/B members only)

This information is taken from your RMPP Annual Benefit Statement issued to you in early September 2016. It is the total Age 60 (NRA60) and Age 65 (NRA65) lump sum benefits built up to 31 March 2016 but does not include any benefit you may build up after that date. If you are already receiving your Age 60 benefits then the figure will be Age 65 benefits only. If you have any questions as to how this figure has been calculated, you should contact the Pensions Helpline on 0114 241 4545.

Your Plan CSDB pensionable pay at 31 March 2016

This information is taken from your RMPP Annual Benefit Statement issued to you in early September 2016. This is your Career Salary Defined Benefit Pensionable Pay which counts for service after 1 April 2008 and which goes towards calculating your “pension block” each year. If you have any questions as to how this figure has been calculated, you should contact the Pensions Helpline on 0114 241 4545. If the Plan CSDB pensionable pay is lower than you expect, this may be due to you having earned less due to absence from work in the year to 31 March 2016. If the CSDB pensionable pay is higher than you expect, this may be due to you having earned pensionable allowances or bonus. If you have a question about these figures, you should contact the Pensions Helpline on 0114 241 4545.

Your basic pay at April 2016

This figure was calculated at 10 April 2016 and is your basic “annual” rate of pay, excluding overtime and based on the hours you were working on 10 April. The figure takes account of any purchase of annual leave. If your rate of pay or hours have changed since 10 April, then this might explain any differences with your current basic pay. The personal illustration is prepared at April 2016 to follow on from the Trustee’s Benefit Statement which was prepared at 31 March 2016. We will not be able to issue a new illustration if your circumstances have changed since April as this would not take into account associated changes to your pension benefits since April and as a result would not be a proper comparison. If you believe that the basic pay figure at April 2016 is wrong, please contact 0345 6060603 and press option 1, then option 1 again to speak to a member of the Pay Helpline.

DB pension you have built up to 31 March 2016

This information is taken from your RMPP Annual Benefit Statement issued to you in early September 2016 and represents the total pension you have built up to 31 March 2016. If you have any questions as to how this figure has been calculated, you should contact the Pensions Helpline on 0114 241 4545. 

Additional DB pension you would build up to 31 March 2018 (or age 65 if earlier) if you stay in service until then

This information represents the pension you would build up between 1 April 2016 and 31 March 2018, provided you remain an active member of the Plan over that period. Please note that no contributions are paid after completion of 45 years’ pensionable service. The figures for your current additional pension (“before”) are the same as the figures for current additional pension (“after”) as no changes to the Plan are proposed before 1 April 2018.

Total illustrative pension, including your notional State Pension, if you stay in service until age 60 and then take all your benefits in full (with early retirement reductions)

The ‘before’ figures assume you continue to build up defined benefit (DB) benefits on the current basis until age 60 and allowing for early retirement reductions at current rates. If you are in Section B, in addition, you would receive a separate lump sum of three times your combined RMPP/RMSPS pension. If you are in Section C, you could receive a lump sum by giving up part of your combined RMPP/RMSPS pension. These figures include estimated notional State Pension earned to age 60 (but payable from your actual State Pension Age). The illustrative pension shown allows for future increases in pensionable pay at 2.5% a year and future inflation at 1.5% a year, so as to show the figures in present day terms. The ‘equivalent to x% of basic pay’ is the pension figure shown above divided by your basic pay at April 2016.

The ‘after’ figures assume future pension provision on a defined contribution (DC) basis after 1 April 2018. Currently the State pension increases by the higher of the growth in average earnings, the Consumer Price Index (CPI), or 2.5% (the Government’s “triple lock”). An allowance has been made in the calculations for the State pension to increase by 2.5% a year. Hence, the State pension included in the calculations could be more than £8,093.80 a year to reflect this difference.

Total illustrative pension, including your notional State Pension, if you stay in service until age 65 and then take all your benefits in full (with early retirement reductions)

The ‘before’ figures assume you continue to build up defined benefit (DB) benefits on the current basis until age 65 and allowing for early retirement reductions at current rates. If you are in Section B, in addition, you would receive a separate lump sum of three times your combined RMPP/RMSPS pension. If you are in Section C, you could receive a lump sum by giving up part of your combined RMPP/RMSPS pension. These figures include estimated notional State Pension earned to age 65 (but payable from your actual State Pension Age). The illustrative pension shown allows for future increases in pensionable pay at 2.5% a year and future inflation at 1.5% a year, so as to show the figures in present day terms. The ‘equivalent to x% of basic pay’ is the pension figure shown above divided by your basic pay at April 2016. 

The ‘after’ figures assume future pension provision on a defined contribution (DC) basis after 1 April 2018. Currently the State pension increases by the higher of the growth in average earnings, the Consumer Price Index (CPI), or 2.5% (the Government’s “triple lock”). An allowance has been made in the calculations for the State pension to increase by 2.5% a year. Hence, the State pension included in the calculations could be more than £8,093.80 a year to reflect this difference.

Total illustrative pension, excluding your notional State Pension, if you stay in service until age 60 and then take all your benefits in full (with early retirement reductions)

The ‘before’ figures assume you continue to build up defined benefit (DB) benefits on the current basis until age 60 and allowing for early retirement reductions at current rates. If you are in Section B, in addition, you would receive a separate lump sum of three times your combined RMPP/RMSPS pension. If you are in Section C, you would receive a lump sum by giving up part of your combined RMPP/RMSPS pension. These figures exclude estimated notional State Pension earned to age 60 (but payable from your actual State Pension Age). The illustrative pension shown allows for future increases in pensionable pay at 2.5% a year and future inflation at 1.5% a year, so as to show the figures in present day terms. The ‘equivalent to x% of basic pay’ is the pension figure shown above divided by your basic pay at April 2016.

The ‘after’ figures assume future pension provision on a defined contribution (DC) basis after 1 April 2018.

Total illustrative pension, excluding your notional State Pension, if you stay in service until age 65 and then take all your benefits in full (with early retirement reductions)

The ‘before’ figures assume you continue to build up defined benefit (DB) benefits on the current basis until age 65 and allowing for early retirement reductions at current rates. If you are in Section B, in addition, you would receive a separate lump sum of three times your combined RMPP/RMSPS pension. If you are in Section C, you would receive a lump sum by giving up part of your combined RMPP/RMSPS pension. These figures exclude estimated notional State Pension earned to age 65 (but payable from your actual State Pension Age). The illustrative pension shown allows for future increases in pensionable pay at 2.5% a year and future inflation at 1.5% a year, so as to show the figures in present day terms. The ‘equivalent to x% of basic pay’ is the pension figure shown above divided by your basic pay at April 2016.

The ‘after’ figures assume future pension provision on a defined contribution (DC) basis after 1 April 2018.

[SECTION A/B MEMBERS ONLY]  Total illustrative lump sum, if you stay in service until age 60 and then take all of your benefits in full (with early retirement reductions)

The before and after lump sums are the same value since part of your Defined Contribution (DC) fund, earned for service after 1 April 2018, could be used to provide cash lump sum benefits. So, we have therefore provided figures assuming no change to your overall cash lump sum benefits. For the purposes of the illustrations, any DC fund over and above that taken as cash would be used to provide pension.

[SECTION A/B MEMBERS ONLY]  Total illustrative lump sum, if you stay in service until age 65 and then take all of your benefits in full

The before and after lump sums are the same value since part of your Defined Contribution (DC) fund, earned for service after 1 April 2018, could be used to provide cash lump sum benefits. So, we have therefore provided figures assuming no change to your overall cash lump sum benefits. For the purposes of the illustrations, any DC fund over and above that taken as cash would be used to provide pension.

Your estimated contributions

Your current contributions are based on your current Plan CSDB pensionable pay at 1 April 2016.

Your contributions under the proposal

Your contributions under the proposal are based on your basic ‘annual’ rate of pay, excluding overtime and based on the hours you were working on 10 April 2016.

Important legal note about your personal illustration: 

The calculation and payment of your benefits are always subject to the provisions as from time to time in force of the Plan Trust Deed and Rules and, for the RMSPS, the Postal Services Act 2011, as well as the Rules governing any new DC arrangement. To the extent that the comments or figures in the personal illustration differ from those Rules / Act, the provisions in the Rules / Act will prevail. The estimated illustration gives no right to benefits and should not be seen as creating any expectation of benefits or as forming part of any type of contract. Rights to benefits arise only under the terms of the relevant Royal Mail pension arrangement as in force from time to time. Royal Mail reserves the right to amend, suspend or withdraw all or any part of any Royal Mail pension arrangement and/or Pension Salary Exchange at any time.

The figures have been prepared by the Company’s pensions advisers, Willis Towers Watson. Whilst Royal Mail Group and Willis Towers Watson have tried to ensure that the information used reflects your details, it is possible that the information is not up to date or is otherwise incorrect. If you believe your information is not correct then you should contact the Pension Consultation Helpline.

The calculations make assumptions about your future level of pay. These and the other assumptions used may or may not be borne out in practice and your benefits may be higher or lower as a result. The assumptions used do not represent a commitment or an agreement as to how your pay will increase in the future. Your future pay may also change for other reasons, for example if your working hours change or if your role within the Royal Mail Group changes.