Royal Mail Pension - Deferred members increases

Miiade

I left Royal Mail in 2014 having been a member of their DB pension plan for 21 years. I have been looking at my annual benefits statements for the the last 3 years and on the statements for 2015 and 2016, no annual increase were added to my benefits. Only in 2017 was a 1% increase added.

My understanding is that as a deferred member I should have received increases in line with CPI. Do any readers / current Royal Mail deferred members know if this is correct.

I have written to the administrators and am awaiting their response. I am planning to take this pension on a reduced basis at age 55 (now 47) as I am a low earner and this extra money will increase my standard of living.

Many thanks.

xylophone

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/632948/RMSPS_ARA_2016_17_HC_257_Print.pdf

For section A and B members, in accordance with scheme regulations, eligible pensions in payment and deferred benefits were not increased in April 2016, reflecting the -0.1% change in the CPI for the year ended
September 2015. No discretionary increases were awarded.

For section C members, in accordance with scheme regulations, eligible pensions in payment and deferred benefits were increased by 0.8% in April 2016, reflecting the change in the RPI for the year ended September 2015 (capped at 5.0%). No discretionary increases were awarded

Miiade

Thanks for the quick reply. I am in section c of the plan and it appears that increases for deferred members are not automatic as I previously thought.

hyubh

Miiade wrote: »

I am in section c of the plan and it appears that increases for deferred members are not automatic as I previously thought.

Not where where you infer that from the document linked too...?

xylophone

I have just been looking at

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/246768/0149.pdf

which is the Report and Accounts for 2013 -14.

Main features of the scheme

RMSPS is an unfunded defined benefit scheme providing pension and lump sum benefits on retirement and death to members and former members of the Royal Mail Pension Plan (RMPP), and their dependants, in
respect of their service up to 31 March 2012. The scheme is closed and has only pensioner and deferred members. As this is a closed scheme, there are no employer or employee contributions, the on-going
pension payments and other payments are funded from the consolidated fund.

There are two primary benefit structures within RMSPS; section A&B members are entitled to a pension and an automatic lump sum on retirement (with the option to exchange pension for additional lump sum or vice versa subject to Her Majesty’s Revenue and Customs (HMRC) limits).

Section C members are entitled to a pension on retirement, with the option to exchange pension for a lump sum up to HMRC limits.

Within the scheme there are three main categories of membership: pensioners (those members who are receiving a pension); deferred members (those members who have left pensionable service with RMPP but are not yet receiving their pension) and ‘active deferred’ members (those members who remain in pensionable service with RMPP). Active deferred members differ from deferred members in that their pension entitlements receive revaluation based on the Retail Prices Index (RPI). Once they leave RMPP service and become deferred members, revaluation is based on the Consumer Prices Index (CPI).

Miiade

So as a section c member I have he option to swap sum of my pension for a lump sum. Does anyone know what the conversion rate would be for this scheme?

Waiting on the administrators to answer my query as to why there was no increases in the years 2015 and again in 2016, will post a reply when I get it. Not yet had my 2018 benefit statement think due next month.

Miiade

I have just seen some figures which show the swap rate for my scheme to lump sum is around £1 to £23.

I am considering giving up some of my pension for a lump sum and am wondering if this rate is good / bad / average, by industry standards? Any advice welcome.

Dox

Miiade wrote: »

I have just seen some figures which show the swap rate for my scheme to lump sum is around £1 to £23.

I am considering giving up some of my pension for a lump sum and am wondering if this rate is good / bad / average, by industry standards? Any advice welcome.

You need to revisit in 7 years, when you reach age 55 - the point at which you would make such a decision (it can't be made ahead of time). The rate could well change by then (either up or down).

Miiade

I have spoken to the pension administrators today and they have told me that there were no increases to my pension in 2015 and 2016 as the cpi rate was 0%.

For other deferred members of the Royal Mail pension plan c, do not assume that you are automatically getting a pension increase each year, as this is not the case.