2. How much would the Collective Plan cost me?

You and Royal Mail pay into the Collective Plan

You pay in 6% of Pensionable Pay

Pensionable Pay is your Basic Pay plus any allowances and bonuses that count towards your pension. 6% is the same percentage as people pay into RMPP. It’s also the same as the highest standard saving rate in RMDCP, which is the rate most members choose to save at.

Royal Mail pays in 13.6% of Pensionable Pay

This amount is fixed. Most of this money is invested in the Collective Plan to pay for benefits and running costs. Some of it pays the insurer that provides the ill-health benefits.

Pensionable Pay is different in different plans - The Collective Plan defines Pensionable Pay as your Basic Pay plus any allowances and bonuses that count towards your pension.

If you joined RMPP before 1987 – so are in section B – this is also how Pensionable Pay is defined in your current plan.

If you joined your pension plan after 1987 – so are in RMDCP or sections C or F of RMPP – the definition of Pensionable Pay that your plan uses is different to the one the Collective Plan uses. For example, in the Collective Plan there’s no cap on Pensionable Pay and no lower-earnings deduction. This means you would pay more into the Collective Plan than you pay into your current plan. But because Pensionable Pay is also used to work out benefits, your income and cash lump sum would be based on a higher figure too.

Some examples of what a member and Royal Mail would pay in


Overall, Royal Mail expects to pay a bit more into the Collective Plan than it pays into the current plans. At the moment, Royal Mail pays in more for members of RMPP than RMDCP. With the Collective Plan, Royal Mail would pay the same rate for every member. We and the unions agree that this makes the Collective Plan fairer.

Will Royal Mail ever pay in more? Royal Mail will only pay in more if the lump sum part of the Plan does not have the money it needs to pay people the lump sums they have already built up. It will not pay in more if the Plan’s trustees think the income part of the Plan does not have enough to pay people the incomes they’ve built up. If this happens, incomes will go down.


Could I pay in a different amount? You cannot pay in less than 6%, but there are two ways you could save more. Lump Sum Booster - You pay an extra 1% of your Pensionable Pay into the cash lump sum section of the Plan. Royal Mail pays in another 1%. This boosts your cash lump sum. We expect this boost to be 2.2% of your Pensionable Pay, but this could change. AVCsAdditional Voluntary Contributions build up a pot of pension savings alongside your income and cash lump sum.

Will you send me a personal statement showing how these changes affect me?

No, we won’t send personal statements. But you can see examples of how benefits might build up in the Collective Plan, compared to how they might build up in the current plans. 

If the Plan launches, you’ll get annual statements that show how your benefits are building up. And you’ll continue to get annual statements from your current plans.