15 December 2019
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Transitional arrangements FAQs

What are the transitional arrangements?

The Company has put in place transitional arrangements from 1 April 2018, while it lobbies Government to make the necessary legislative and regulatory changes to enable a CDC scheme.

As part of these transitional changes, the Company has implemented a new scheme within the RMPP, called the DBCBS, and an improved Royal Mail Defined Contribution Plan (RMDCP).

For RMPP members:

Unless they instructed us otherwise, RMPP members automatically started building up DBCBS benefits on 1 April 2018. If preferred, they can instead opt to join the improved RMDCP. They can do this at any time by returning the 'Joining RMDCP' form sent to them in their home mailing in February 2018. The form is also available at www.myroyalmail.com/pensions. 

For standard level RMDCP members:

Unless they instructed us otherwise, standard level RMDCP members were enrolled into the top contribution tier of the RMDCP from 1 April 2018. This means that members contribute 6% of RMDCP pensionable pay into their pension, while the Company puts in 10%.

RMDCP members with more than 5 years’ service with the Company (including 4 years’ continuous service at the standard contribution level in the RMDCP) can choose to join the RMPP to build up DBCBS benefits. They can do this at any time by returning the ‘Joining DBCBS’ form sent to them in their home mailing in February 2018. The form is also available at www.myroyalmail/pensions.

I want to choose a different transitional arrangement, but I didn’t return the form by 19 March deadline. What should I do?

Unless members returned a form prior to 19 March 2018, they were automatically enrolled into one of our transitional arrangements from 1 April 2018. Members can still choose a different option at a later date by returning the form sent to them in their home mailing in February 2018. Forms are also available at www.myroyalmail/pensions. Their choice will then come into effect from the next available payroll date after the form is received.

If I am an RMPP member, what should I do?

RMDCP and DBCBS benefits work in different ways. It is important that RMPP members do not make the decision whether to build up DBCBS or RMDPC benefits based only on contribution levels. (These are detailed in the letter and booklet sent to RMPP members at the end of February 2018.) Other factors, such as age and attitude to risk, should be considered.

The DBCBS guarantees that at age 65 members will get a lump sum of at least the 19.6% of pensionable pay that has been paid on their behalf each year.  The DBCBS also aims to provide increases to a member’s lump sum. This is dependent upon the scheme’s investment performance each year. These increases cannot be guaranteed. Each year, the scheme’s investment performance will be reviewed and, if appropriate, discretionary increases to the lump sum will be awarded and shared across members. Once credited, any discretionary increases are also guaranteed.

The DBCBS will seek to smooth the discretionary increases that are awarded.  That means that if investment performance is very good, some of the returns may be held back, and awarded in later years. But if investment performance is poor, then increases may be lower than inflation, or no increase may be credited at all.

If, however, you would prefer to have your investment performance directly linked to the underlying investments then you may want to consider opting to join the improved RMDCP.  Investment performance can do down as well as up, and you may get back less than the contributions paid on your behalf. But you would get the full benefit if investment performance was good. If you are unsure about which scheme is right for you, you may wish to speak to an independent financial adviser. The Company cannot provide you with financial advice.

If I am in the RMDCP, with more than 5 years’ service with the Company (including 4 years’ continuous service at the standard contribution level in the RMDCP), what should I do?

RMDCP and DBCBS benefits work in different ways. It is important that RMPP members do not make the decision whether to build up DBCBS or RMDPC benefits based only on contribution levels. (These are detailed in the letter and booklet sent to RMPP members at the end of February 2018.) Other factors, such as age and attitude to risk, should be considered.

The DBCBS guarantees that at age 65 members will get a lump sum of at least the 19.6% of pensionable pay that has been paid on their behalf each year.  The DBCBS also aims to provide increases to a member’s lump sum. This is dependent upon the scheme’s investment performance each year. These increases cannot be guaranteed. Each year, the scheme’s investment performance will be reviewed and, if appropriate, discretionary increases to the lump sum will be awarded and shared across members. Once credited, any discretionary increases are also guaranteed.

The DBCBS will seek to smooth the discretionary increases that are awarded.  That means that if investment performance is very good, some of the returns may be held back, and awarded in later years. But if investment performance is poor, then increases may be lower than inflation, or no increase may be credited at all.

If, however, you would prefer to have your investment performance directly linked to the underlying investments then you may want to consider opting to join the improved RMDCP.  Investment performance can do down as well as up, and you may get back less than the contributions paid on your behalf. But you would get the full benefit if investment performance was good. If you are unsure about which scheme is right for you, you may wish to speak to an independent financial adviser. The Company cannot provide you with financial advice.

If I am in the RMDCP, but have less than 5 years’ service with the Company, what should I do?

If you would like to put 6% of your pensionable pay into your RMDCP retirement account so that you get the top amount (10%) from the Company, you do not need to do anything.

If you would prefer to put less into your RMDCP retirement account and receive smaller contributions from the Company, you should complete the RMDCP Contribution Level form which was included in your letter and booklet.

The Company will write to you when you are eligible to join the RMPP and build up benefits in the DBCBS.

What happens to current AVC deductions under the Transitional Arrangements?

For RMPP members, any Bonusplan or Flexiplan benefits would continue unchanged if you join the DBCBS. For RMPP members choosing to join the RMDCP, any Bonusplan or Flexiplan contributions you currently make to RMPP would cease. Added Years contributions ceased for all RMPP members on 31 March 2018.

For RMDCP members remaining in the RMDCP, any AVCs you are paying will continue unchanged.

For RMDCP members joining the DBCBS, your AVCs would cease. You cannot add to your RMDCP benefits if you move to the DBCBS, but you can pay extra to the DBCBS via “Bonusplan” or “Flexiplan”, the DBCBS AVC arrangements. After you have started contributing 6% of pensionable pay to the DBCBS you can then apply to pay extra contributions to Bonusplan or Flexiplan. To do this, please call the Pensions Helpline on 0114 241 4545 and ask about AVCs, or email Pensions Additional Benefits at pensions.additional.benefits@royalmail.com and ask for an application form to join Bonusplan or Flexiplan.

In the meantime you can find out more information on Bonusplan and Flexiplan at https://www.royalmailpensionplan.co.uk/section-c/planning-your-future/topping-your-pension-avcs

The AVC guide can be downloaded here

I am a RMDCP member paying AVCs. Can I keep paying into my RMDCP AVCs if I move to the DBCBS or can I transfer my AVCs to the DBCBS (or to a SIPP)? What happens to my RMDCP AVCs if I don’t transfer?

Your RMDCP AVCs are part of your overall RMDCP benefits and you cannot transfer them to the DBCBS. However, your RMDCP benefits will still remain invested in the RMDCP in their current investment funds. These benefits will still be administered by Zurich. You can take your benefits from the RMDCP separately to your DBCBS benefits at any time after minimum pension age (currently age 55). Alternatively you can transfer your RMDCP benefits to a personal pension policy/SIPP if you wish. 

You cannot add to your RMDCP benefits if you move to the DBCBS, but you can pay extra to the DBCBS via “Bonusplan” or “Flexiplan”, the DBCBS AVC arrangements. After you have started contributing 6% of pensionable pay to the DBCBS you can then apply to pay extra contributions to Bonusplan or Flexiplan. To do this, please call the Pensions Helpline on 0114 241 4545 and ask about AVCs, or email Pensions Additional Benefits at pensions.additional.benefits@royalmail.com and ask for an application form to join Bonusplan or Flexiplan.

In the meantime you can find out more information on Bonusplan and Flexiplan at https://www.royalmailpensionplan.co.uk/section-c/planning-your-future/topping-your-pension-avcs

The AVC guide can be downloaded here

Will I be able to access pension flexible drawdown as a DBCBS member or as an RMDCP member?

Neither the DBCBS nor the RMDCP permits pensions flexible drawdown.  If, after taking independent financial advice, you decide that you would like to use pensions flexible drawdown you will need to transfer your pension benefits to a provider who offers pensions flexible drawdown.

How can I transfer my benefits?

If you are an RMDCP member, please contact the Zurich Royal Mail Service Team for more information.

If you are a DBCBS member, please contact the Pensions Service Centre.  Please note that if your DBCBS/RMPP transfer value is greater than £30,000 you will need to take independent financial advice before transferring your pension benefits.  Generally, benefits must be transferred six months before Normal Retirement Age (65).