Consultation on a new Royal Mail pension plan
Please see below for the most common questions you are asking so far in the consultation:
During the negotiations in 2018, one of the key ambitions of the CWU and Royal Mail was to have one plan for all our people. The Collective Plan achieves this - Royal Mail would pay the same contributions into the same plan for everyone with at least a year’s service. We believe this is fairer. The RMDCP and the Royal Mail Pension Plan (RMPP) would therefore close.
During the negotiations in 2018, one of the key ambitions of the CWU and Royal Mail was to have one plan for all our people. The Collective Plan achieves this - Royal Mail will pay the same contributions into the same plan for everyone which we believe is fairer. A transition period would be impractical as it would be costly to maintain and, as many people do not take their benefits at their Normal Retirement Age, it would not work for everyone. It has therefore been decided that there would not be transition arrangements for people nearing retirement.
It is worth noting that members who retire after only a short period in the Collective Plan may have options other than taking a small income for life. It would be possible to transfer the benefits into another arrangement. Or, if the total value of benefits in the Collective Plan are small enough, it is likely that they could be taken as a cash lump sum. The first 25% would be tax free, the remainder would be taxed.
No – the introduction of the Collective Plan would not affect your options for how and when you take your benefits in RMPP or RMDCP. More detail is provided on page 12 of the booklet you were sent in the post.
The decision as to whether transfer values would be accepted by the new Collective plan is the responsibility of the Trustees of the Collective Plan, who have not yet been appointed. So it is too soon to say whether transfers into the Plan would be allowed. More detail would be provided in communications in the run up to the launch of the Plan.
Around three months before the launch of the Collective Plan, further communications would be sent to employees to explain how they can join the Plan if they are not eligible to be automatically enrolled into it (you can find out if you will join automatically on page 13 of the booklet you were sent in the post).
Of course, you can also choose to join the RMDCP any time before then. If you wish to do so, you need to complete a "Choices form" which can be obtained from the Scottish Widows Royal Mail Service Team at:
• Telephone: 0800 092 8263; or
If you are currently making Additional Voluntary Contributions (AVCs) into RMPP or RMDCP, these would automatically stop when the Collective Plan launches. They would remain invested as they are now until you take your benefits or choose to transfer them out.
You would be written to around three months before the new Collective plan starts to give you further information on the new AVC arrangements and how you can make AVCs into the Collective Plan. You would have two options – the Lump Sum Booster and defined contribution AVCs.
More detail about AVCs can be found on pages 11 and 12 of the booklet you received in the post.
When you retire early, your income is reduced to reflect the fact that is will be paid for longer. And your lump sum is reduced to reflect the fact that it will not remain invested for as long. The early retirement factors used to work out the reductions in the Collective Plan would be produced by the future Plan Actuary and would be calculated on a “central basis” which means the total value of your benefits is expected to be the same whether you retire at your Normal Retirement Age or early.
No – Normal Retirement Ages in RMPP and RMDCP are not changing. More detail can be found on page 11 of the booklet you received in the post.