15 December 2019
myroyalmail is updated daily

Improved RMDCP FAQs

What is a standard level member of the RMDCP?

Standard level RMDCP members pay 4%, 5% or 6% of pensionable pay to the RMDCP.

How can I find out if I am a standard level member of the RMDCP?

You can find out if you are a member of the RMDCP by looking at your payslip.

Standard level RMDCP members will see the code “RMDCP” and either “4%”, “5%” or “6%” alongside their pension deduction on their payslip. (The percentage or % indicates the employee contribution level they are paying).

What improvements has the Company made to the RMDCP?

From 1 April 2018, we increased the Company contribution to the RMDCP by 1% in each tier, up to a maximum of 10%, as the summary table below shows. On top of this, the Company also pays the cost of other member benefits, including death-in-service and ill-health benefits.

From 1 April 2018, the Company moved standard level RMDCP members into the top contribution tier (10% from the Company and 6% from the member), unless members told us they did not want to be enrolled at this level. Future members of the RMDCP will also be enrolled at the top contribution tier unless they tell us they do not want to be enrolled at this level.

 

Your contribution

(paid via PSE)

Improved Company contribution

Total contribution

RMDCP members contribute at this rate unless you tell the Company you do not want to

6%

10%

16%

RMDCP members could opt to contribute at these levels

5%

9%

14%

4%

8%

12%

What is RMDCP pensionable pay?

RMDCP is your basis salary or wage (excluding allowances, overtime, bonuses or any other items) if you are employed on a full time contract.

If you are contracted to work less than full time it means:

  • Your basic salary or wage for your contractual hours, plus
  • The salary or wage that you earn for non-contractual hours worked each pay period (which is a week if you are a weekly-paid employee and a month if you are a monthly-paid employee).

Earnings for hours of work that are in excess of the number of hours normally scheduled for someone working full time in your role are not counted for the purpose of RMDCP pensionable pay.

Allowances, bonuses and other items are not counted for the purpose of RMDCP pensionable pay.

What do RMPP members need to do if they would like to join the RMDCP?

If RMPP members would prefer to opt out of the DBCBS and join the RMDCP, they should complete the ‘Joining RMDCP’ form enclosed in the booklet which landed at members’ home addresses from 28 February 2018. They can also download the ‘Joining RMDCP’ form here www.myroyalmail/pensions

RMPP members can opt to join the RMDCP at any time. Members who returned their forms by 19 March 2018 started building up benefits in the RMDCP on 1 April 2018. Members can still return the completed form after that date. Those members will have started building up DBCBS benefits in the RMPP on 1 April, but will leave the DBCBS from the next available payroll date after their form is received.

Please note that by doing this, RMPP members are leaving the RMPP and their benefits will be calculated accordingly (see page 13 of the booklet). In particular, they should note that from the date of opting out their benefits built up to 31 March 2018 will increase in line with CPI up to 5% a year instead of RPI.

RMPP members, who wish to opt out of the DBCBS, are advised to seek independent financial advice to ensure that this is the RMDCP is the best option for them. Neither the Company, nor the Pension Review Helpline nor the Trustee, can provide financial advice. 

I am an RMDCP member, with more than 5 years’ service with the Company (including 4 years’ continuous services at the standard contribution level in the RMDCP) and am currently making AVCS to RMDCP.

-          Will these AVCs continue if I opt to stay in the RMDCP?

Your AVCS continue after 1 April 2018 at the current level until you change them. To change your AVCs, please contact the Pay Services helpline on 0345 60 60 603 (pressing Option 1, then Option 1 again)

-          Will these AVCs continue if I opt to join the RMPP to build up DBCBS benefits?

No, if you opt to join the RMPP and build up DBCBS benefits, the AVCs you are making to the RMDCP will cease. If you would like to make AVCs, please contact the Pensions Helpline on 0114 241 4545 or email pensions.additional.benefits@royalmail.com

How can the Company move me to the highest RMDCP contribution tier without my permission?

If you would prefer to put less into your RMDCP retirement account and receive smaller contributions from the Company, please complete the ‘RMDCP Contribution Level’ form included with the letter and booklet sent you to members’ at their home addresses. You can also download the form here www.myroyalmail/pensions

For members who returned the form by 19 March 2018, their contribution choice will take effect from 1 April 2018. Members who return their completed form after 19 March 2018, will have their instructions applied from the next available payroll date after their form is received.

How much will I be contributing to the RMDCP when the Company moves me to the highest RMDCP contribution tier?

The examples below show the contributions that would go to the retirement account of an RMDCP member, earning between £20,000 and £40,000 a year:

 

Your contribution (6%)

Royal Mail's contribution (10%)

Total contribution (16%)

Pensionable pay1

 

Annual

 

Monthly

 

Weekly

 

Annual

 

Monthly

 

Weekly

 

Annual

 

Monthly

 

Weekly

£20,000

£1,200

£100

£23

£2,000

£167

£38

£3,200

£267

£62

£25,000

£1,500

£125

£29

£2,500

£208

£48

£4,000

£333

£77

£30,000

£1,800

£150

£35

£3,000

£250

£58

£4,800

£400

£92

£35,000

£2,100

£175

£40

£3,500

£292

£67

£5,600

£467

£107

£40,000

£2,400

£200

£46

£4,000

£333

£77

£6,400

£533

£123

On top of this, the Company also pays the cost of other member benefits, including death-in-service and ill-health benefits.

I am earning £25,000 pensionable pay and was previously contributing 4% pensionable pay to the RMDCP. How much have my contributions increased by now that I am contributing at the 6% contribution level?

This member’s contributions increased by £10 a week or £42 a month. At the same time the Company’s contribution to this member’s retirement account increased from by £5 a week or £21 a month. There is more information on sample illustrations, including with respect to tax relief, in the letters and booklets sent to RMDCP members. 

I am earning £25,000 pensionable pay and was previously contributing 5% pensionable pay to the RMDCP. How much have my contributions increased by now that I am contributing at the 6% contribution level?

This member’s contributions increased by £5 a week or £21 a month. At the same time the Company’s contribution to this member’s retirement account increased by £5 a week or £21 a month. There is more information on sample illustrations, including with respect to tax relief, in the letters and booklets sent to RMDCP members. 

I am earning £40,000 pensionable pay and was previously contributing 4% pensionable pay to the RMDCP. How much have my contributions increased by now that I am contributing at the 6% contribution level?

This member’s contributions will increase by £15 a week (or £67 a month). At the same time the Company’s contribution to this member’s retirement account will increase by £8 a week or £33 a month. There is more information on sample illustrations, including with respect to tax relief, in the letters and booklets sent to RMDCP members. 

I am earning £40,000 pensionable pay and was previously contributing 5% pensionable pay to the RMDCP. How much have my contributions increased by now that I am contributing at the 6% contribution level?

This member’s contributions increased by £8 a week (or £33 a month). At the same time the Company’s contribution to this member’s retirement account increased by £8 a week or £33 a month. There is more information on sample illustrations, including with respect to tax relief, in the letters and booklets sent to RMDCP members. 

What assumptions have been used to calculate the annual retirement income and maximum tax-free cash figures in the RMDCP consultation booklet?

The key assumptions underlying the RMDCP examples are:
• 13% (current) or 16% (improved) of pensionable pay is assumed to be paid into a member’s RMDCP fund each year;
• Pensionable pay remains unchanged (in real terms) over time;
• Investment returns are in line with the benefit illustrations provided to RMDCP members by the RMDCP Trustees, which are broadly 3% a year (above inflation) until age 55, and then reducing down until the investment returns are 1.1% a year (above inflation) at age 65.
• It’s assumed that RMDCP members will take 25% of their fund at retirement to give them the maximum tax-free cash sum. The remaining 75% is converted into a pension in line with the assumptions in the benefit illustrations provided to RMDCP members by the RMDCP Trustees.

How our pensions agreement affects colleagues who have been at Royal Mail less than a year and are therefore an interim level members of the Royal Mail Defined Contribution Plan (RMDCP)

Following our 2018 Pension Review, interim level members of the RMDCP, with less than 12 months’ service at Royal Mail, received a letter and booklet at their home addresses.

This is to help them understand what our agreement in principle could mean for them when they become a standard level member of the RMDCP. They become a standard level member after completing 12 months’ service.

What happens before members reach 12 months’ service at Royal Mail?

Before they reach one year’s service at the Company, members previously contributed 1% of pensionable pay to the RMDCP and the Company contributes 1% on their behalf.

From 1 April 2018, companies were legally required to increase these contribution rates. Interim level members with less than one year’s service now therefore automatically contribute 3% of pensionable pay and the Company contributes 2%. From April 2019, interim level members with less than one year's service will contribute 5% of pensionable pay and the Company will contribute 3%. Please note that these increases are unrelated to the Company's 2018 Pension Review.

What happens when members complete 12 months’ service?

The Company will write to members when they are eligible to become standard level members of the RMDCP. At that point, members’ contributions will increase to 6% and the Company’s contribution to 10%, the top standard level contribution tier, unless they tell us that is not what they want. Details of how to tell us if this is not what they want will be included in the letter members receive as they approach 12 months’ service.