2010 archive

April 2010 Royal Mail Pension Plan RMPP Changes Q&A

Current pensioners of the Plan will not be affected by the changes to the minimum pension age and the normal retirement age. A flexible approach to retirement is being introduced to enable members who are over the minimum pension age to claim part or all of their Plan benefits while staying in employment (subject to Company consent).

 Download the document issued in October 2009 (PDF 40KB) explaining three changes that will affect members of the Royal Mail Pension Plan (“the Plan”) from April 2010.

 Download the reminder issued in January 2010 (PDF 132KB)

  • I've heard that you can't take your pension at 50 anymore. Is this true?

    The Government has changed the law to increase the Minimum Pension Age (MPA). The MPA is the earliest age at which you can take your pension. MPA is currently age 50. MPA will increase to age 55 from 6 April 2010.

    This change means that, from 6 April 2010, you will be unable to take your pension (and any lump sum) unless you are aged 55 or over (except for ill-health retirement).

  • The company

    Royal Mail Group Ltd is wholly owned by the Government. Royal Mail is one of numerous competing postal operators licensed by Ofcom and subject to the requirements of regulation.  

    Further information about our brands and businesses can be found in 'Our businesses' section.

  • Access to information

    Annex 1 to this scheme lists the types of information that we currently publish or intend to publish in the future under headings that we think will be helpful to users, together with examples of material available under each heading and how this can be obtained. This annex together with the structured websites and their search facilities acts as a guide to the information available.

    We will continue to update the material shown in the Annex to this scheme and review it annually, or as directed by the Information Commissioner. Within the “Services we offer”’ class of information, we reserve the right to add from time to time publications about new products and services we may introduce for our customers, or to delete information about products and services that we have withdrawn.

    The information published in our publication scheme is available:

    • On our websites
    • From our branch offices
    • By request to our helplines or,
    • For selected historical material, from our archives.
  • I've heard that I have to apply for a Flexible Retirement Estimate by 15 January 2010. What happens if I miss that date?

    You may take your Plan benefits on a reduced basis at any time before Normal Retirement Age (NRA) after 6 April 2010 if you are over age 55, so it is only necessary for you to register for a Flexible Retirement Estimate if you wish to take your Plan benefits on 1 April 2010 (provided you are over the Minimum Pension Age). Benefits are not reduced on or after NRA.

    If your request for a Flexible Retirement Estimate is received after 5.00 p.m. on 15 January 2010 and you will be over age 55 on 6 April 2010 your Estimate will not be prepared until after 6 April 2010. Payment of your Plan benefits would also start after 6 April 2010.

    However, if you were born between 7 April 1955 and 5 April 1960 and your request is received after 5.00 p.m. on 15 January 2010 a Flexible Retirement Estimate cannot be prepared for you, and you will not be able to apply for an Estimate until you have reached age 55.

    If you did not request a Flexible Retirement Estimate by the 15 January 2010 deadline, please contact the Pensions Helpline AFTER 1 April 2010 for details of how to apply for a Flexible Retirement Estimate. To ensure you receive your Plan benefits when you intended, please contact the Pensions Helpline in good time before the date you wish the payment of your Plan benefits to start.

  • I am currently 58 years old and will be 60 in April 2011. If I take my pension at this date, could I then join the new Royal Mail Defined Contribution Plan (the DC Plan)?

    Provided you stay in Company service (and you are eligible), you may be able to join the DC Plan if you have stopped building up any further RMPP benefits.

    However, the changes made to the RMPP from 1 April 2010 allow you to take your NRA 60 pension (without reduction from age 60), keep contributing to RMPP and continue to build up benefits which have a NRA of 65. This would be an alternative to taking all your Plan benefits from RMPP and joining the DC Plan to build up extra pension.

  • Is the option to take unreduced NRA 60 benefits a once only chance, or can you split your pension at any point up to age 65?

    If you are in pensionable service, you will have a choice at any time after you reach minimum pension age (age 55 after 6 April 2010) to take your NRA 60 pension and at the same time to choose whether to keep contributing or to stop contributing for future pension. However, if you take your NRA 60 pension before age 60 your pension will be actuarially reduced. Should you leave pensionable service at any time after age 60, and you haven't taken your NRA 60 benefits, the process to pay your NRA 60 benefits will be started automatically. If you have not taken any pension before age 60, you would be written to shortly before age 60 to ask what you want to do. If you decide not to take your NRA 60 benefits then your contributions (and build up of pension) will automatically continue after age 60. However, you will not be entitled to any late retirement increase factor on your NRA 60 benefits if you postpone taking these benefits until after age 60. If you decide after age 60 to take your NRA 60 benefits and decide to continue paying contributions, you will still be able to opt out of RMPP at any time after that and stop paying these contributions. If you do opt out, you will no longer build up any Plan benefits in respect of future service. If you decide to opt out, you will not be able to rejoin RMPP at a later date.

  • If an employee has opted out of RMPP will they be allowed to join the DC Plan?

    Yes, they may choose to join the DC Plan, subject to the eligibility criteria. If you would like more information on the Royal Mail Defined Contribution Plan, please contact the Zurich Royal Mail Service Team on 0800 092 8263.
    Note: The Zurich Royal Mail Service Team can only answer queries regarding the Royal Mail Defined Contribution Plan and cannot give you financial advice.

  • If I opt out of RMPP can I re-join RMPP at a later date?

    No.
    If you choose to opt out of RMPP, then you may choose to join the DC Plan, subject to the eligibility criteria. If you would like more information on the Royal Mail Defined Contribution Plan, please contact the Zurich Royal Mail Service Team on 0800 092 8263.
    Note: The Zurich Royal Mail Service Team can only answer queries regarding the Royal Mail Defined Contribution Plan and cannot give you financial advice.

  • What happens if I want to take my pension and reduce my hours?

    Please contact the Pensions Helpline to obtain further information regarding your pension options. Should you wish to reduce your working hours, please speak to your Line Manager.

  • If I reduce my hours what effect will this have on my Royal Mail Pension Plan (the Plan) benefits?

    You will need to consider the impact on your final salary benefit (benefits built up before 1 April 2008) and the impact on your career salary defined benefit pension blocks (benefits built up from 1 April 2008).

    All other things being equal, if you reduce your hours, you will reduce your Pensionable Pay. This will not be an issue for your final salary benefit as it is calculated using full time equivalent pay. For example, if you worked full time at 40 hours per week and earned £18,000 per year and then reduced your hours to 20 hours per week you would earn £9,000 per year. However, your final salary benefit would still be calculated using your full time equivalent pay figure of £18,000 as a starting point.

    Your career salary defined benefit pension blocks are calculated using the Pensionable Pay which you are paid in each year. Reducing your hours will not have any impact on the pension blocks you have built up to date. However, any future blocks will be calculated using the reduced Pensionable Pay you receive from working the reduced hours. So, if you worked full time at 40 hours per week and earned £18,000 per year, then reduced your hours to 20 hours per week, you would earn £9,000 per year and any pension blocks you build up in the future would be calculated using the lower Pensionable Pay figure compared to the blocks you built up before.

    Your death in service benefit will continue to be calculated using your most beneficial pay figure over the last three years as a starting point. The average of the highest pay figures over three consecutive years out of the last ten years of pensionable service may be used if this produces a higher level of benefit.

  • If I reduce my hours, how can I work out how much pension I will lose at NRA? Can I see this by looking at my last (full time) Benefit Illustration?

    If you are only reducing your hours, you can work out what the reduction in the build up of your career salary defined benefit pension blocks will be. For example, if you worked full time at 40 hours per week and earned £18,000 per year, then reduced your hours to 20 hours per week, you would earn £9,000 per year. The reduction in your Pensionable Pay would be £9,000 a year.

    If you are a Section A/B member, your pension blocks are calculated using the following formula:
    Pensionable Pay x 1/80

    Using the £9,000 Pensionable Pay example above, a Section A/B member would build up a pension block of £112.50 each year less than they would have done, had they been earning £18,000 a year. As the Section A/B lump sum block is worth three times the pension block, the reduced lump sum in this example would be £337.50. These reductions would be for each year of working the reduced hours up to NRA (assuming no change to Pensionable Pay).

    If you are a Section C member, your pension blocks are calculated using the following formula:
    Pensionable Pay x 1/60

    If a Section C member earned £9,000, and was working at half-hours, this Pensionable Pay would be reduced by 50% of the Lower Earnings deduction (currently 50% of £3,328) to produce a Pensionable Pay figure of £7,336. This would build up a pension block of £122.27 each year less than they would have done had they been earning £18,000 a year. This reduction would be for each year of working the reduced hours up to NRA (assuming no change to Pensionable Pay).

    Note: Section C members do not build up a lump sum block, although they may convert some of their pension to a lump sum at retirement.

    If you are only reducing your hours, your final salary benefit (ie your benefits accrued before 1 April 2008) will not be affected, because that benefit will be based on your full-time equivalent pay.

  • What happens to any pension enhancement I might receive if I am ill health retired with immediate pension after April 2010?

    Your Plan benefits will be comprised of two elements:

    • your pensionable service up to 31 March 2010 (which has an NRA of 60); and
    • your pensionable service from 1 April 2010 (which has an NRA of 65)

     

    If you qualify for a pension enhancement this will be applied to your NRA 65 benefits. Your NRA 65 benefits will be enhanced by the “additional service credit” applicable to your length of Company service to date, (so all service, including before 1 April 2010 when you were earning NRA 60 benefits, will be taken into account). Any enhancement will be subject to the maximum service limit of 45 years and cannot be more than you would have completed between the date you actually retired and age 65. Both your NRA 65 and NRA 60 benefits (if not already in payment) would then be paid to you on an unreduced basis. Please refer to your Plan Guide for more details.

  • What happens to any pension enhancement I might receive if I take VR after April 2010?

    If you qualify for a pension enhancement, your Plan benefits will be comprised of two elements:

    • your pensionable service up to 31 March 2010 (which has an NRA of 60); and
    • your pensionable service from 1 April 2010 (which has an NRA of 65)

    If, due to the terms of your voluntary severance agreement, you are entitled to a pension enhancement on or after age 55 it will be applied to your NRA 65 benefits. Please refer to your Plan Guide for more details. Please note that any pension enhancements due to voluntary redundancy are subject to the terms of your voluntary severance agreement.

  • I am still in Company service but I am no longer building up NRA 65 benefits. Can I still get a pension enhancement if I take VR or ill health retirement?

    No. If you are in Company service, and are no longer building up NRA 65 benefits (either because you have opted out of the Plan or because you have asked for your NRA 65 benefits to be paid to you), then you cannot receive a pension enhancement if you accept voluntary redundancy or are ill health retired.

  • What will be the arrangements for Plan members who take their NRA 60 benefits, continue to build up NRA 65 benefits and then die?

    If a member has chosen to take their NRA 60 benefits, continues to build up NRA 65 benefits and subsequently dies in Company service the death in service lump sum will be the better of:

    • Section A/B member – 4 x pensionable salary less any NRA 60 lump sum and pension (before tax) already paid;
    • Section C member - 4 x Final Pensionable Pay (unreduced by the Lower Earnings Deduction) less any NRA 60 lump sum and pension (before tax) already paid; or

    The relevant benefits for each Section for death in pension and death in deferment, i.e. the balance of any five year payment guarantee applicable to the NRA 60 pension, and the five year payment guarantee applicable to the NRA 65 preserved pension. Please refer to your Plan Guide for more details.

    Spouse's and dependent's pensions will be calculated using the relevant percentage of the NRA 60 pension in payment and the relevant percentage of an enhanced NRA 65 pension.

  • What will be the arrangements for Plan members who take their NRA 60 benefits and NRA 65 benefits, and subsequently die in Company service?

    If a member has chosen to take their NRA 60 benefits and NRA 65 benefits, and subsequently dies in Company service, a lump sum of a minimum of two times the member's basic annual salary will be paid.

    The lump sum will be comprised of:

    • The balance of any five year payment guarantee applicable to the NRA 60 pension, and
    • The balance of any five year payment guarantee applicable to the NRA 65 pension, and
    • (if the combination of the above amounts does not exceed two times the member’s basic annual salary) a further amount from the Royal Mail Group Life Assurance Scheme to “top-up” the guarantee payments to two times basic annual salary.

    Spouse's and dependent's pensions will be calculated using the relevant percentage of the NRA 60 pension in payment and the relevant percentage of the NRA 65 pension in payment.

  • I see that the Flexible Retirement Options from 1 April 2010 are at the consent of the Company. Does this mean that the Company makes an individual decision every time someone wants to take their benefits? Can the Company decide to let some members take their benefits but not others?

    The Company can withdraw its consent at any time but will operate its consent for all members in a consistent manner. So, the Company will not make an individual decision every time someone wants to take their benefits and will not give (or withdraw) its consent for some members and not others. At the present time the Company has no plans to withdraw its consent.