Major step forward

The Government has today announced plans to legislate for Collective Defined Contribution (CDC) pensions. Pensions Minister Guy Opperman MP made the announcement on a visit to Mount Pleasant mail centre in London, where he also launched an industry consultation on CDC.

The Pensions Minister commented: ‘Collective Defined Contribution pension schemes are an important innovation which will provide more choice and flexibility for pension scheme members and employers. I’m grateful to Royal Mail and the Communication Workers Union for their assistance in getting us to this point.

‘It’s important we get this right which is why we’re consulting on the detail of our proposals before bringing legislation forward. I want to hear the views of the pensions industry as we prepare to introduce CDC pension schemes.’

What does this mean for Royal Mail?

• Since the agreement we reached in February, Royal Mail and CWU have been working to introduce a CDC scheme, delivering an annual pension, subject to the necessary legislation being made. A Defined Benefit Lump Sum scheme would sit alongside it, providing a guaranteed lump sum at retirement
• We are delighted the Government says it plans to legislate for CDC pensions. Its consultation is a major step forward in our campaign to allow us to offer a CDC scheme for our 141,000 employees as soon as possible
• It gives Royal Mail and CWU, the pensions industry and other interested parties a chance to make sure that the legislation works for us
• Royal Mail and CWU will be responding to the consultation in the coming weeks
• We’ll also be updating you on our detailed work on the CDC scheme design.

Jon Millidge, Chief Governance & Risk Officer, Royal Mail Group, added: ‘We are delighted the Government has launched a formal consultation on CDC pensions. This campaign has been a great example of what Royal Mail and the CWU can achieve together.

‘We are committed to delivering the best possible pension arrangements for our people. We are united in our belief that CDC is right for the Company and our people. It is a progressive option which meets our objectives of providing sustainable, affordable and secure future retirement arrangements. We hope the required legislation will be introduced at the earliest opportunity.’

Terry Pullinger, Deputy General Secretary, CWU, said:  ‘We very much welcome this significant milestone announced by the Minister. This is about introducing a tangible solution for 141,000 decent working people, that provides genuine hope for an occupational wage in retirement pension running alongside their state pension.

‘The CWU and Royal Mail Group are ready to lead and illuminate a path for others to follow should they choose. If not us then who, if not now, when? Give us our moment and we will make a very important development in our social history.’