Royal Mail Defined Contribution Plan Website Q&As

Royal Mail Group has introduced a new defined contribution pension plan ('the DC Plan') which is open to eligible new employees (refer to Q: Can I join the DC Plan?) who join service after 1 April 2008. The DC Plan is also open to eligible employees who are not already members of the Royal Mail Pension Plan from 1 April 2009.

In these Q&As, Royal Mail Group means Royal Mail, Parcelforce Worldwide and Post Office Limited and any other employer admitted to the DC Plan.

The DC Plan started to accept pension contributions from members and Royal Mail Group from 1 April 2009. New members of the DC Plan have to complete a 'waiting period' of 1 year of continuous service before they can start to make contributions to the DC Plan. While in the waiting period, members are covered for life assurance benefits under the DC Plan.

The DC Plan is managed by the DC Plan Trustees and maintained by the DC Plan Administrator (Refer to Q: Where can I get more information? for details of the current DC Plan Administrator, Zurich Assurance Limited ('Zurich')).

If you are either an existing employee of Royal Mail Group who joined after 1 April 2008, or a new employee of Royal Mail Group, and have joined Royal Mail Group on a permanent or fixed-term contract (not casual), and you are under age 63, you are automatically joined into the DC Plan. For your first year you will only have life assurance cover provided by the DC Plan. After you have been employed continuously for a year, you will be automatically included in the DC Plan for pension benefits also (unless you choose to opt-out of the DC Plan). Pension contributions are then taken out of your pay and Royal Mail Group will start making pension contributions for you too. These contributions are invested in a pension account in your own name in the DC Plan (the "Member Account").

If you are not yet 18, you would have to wait until you are 18 and have been working for Royal Mail Group continuously for at least one year before pension contributions would begin. You are not eligible to be enrolled in the DC Plan if you are more than 63 years old at the date you join Royal Mail Group.

A guide with full details of the DC Plan will be sent to you when it is time for you to choose the level of contributions you wish to make and the funds into which you would like your contributions to be invested.

Existing employees at 31 March 2008 who are not already members of the Royal Mail Pension Plan were able to elect to join the DC Plan from 1 April 2009.

Following the decision by Royal Mail Group (following consultation with affected members and employees) to close the Royal Mail Retirement Savings Plan ("RSP") with effect from 31 December 2009, contributing members of the RSP were able to elect to join the DC Plan up to 31 December 2009, even if they did not meet the normal eligibility criteria for joining the DC Plan. After 31 December 2009, former RSP contributing members could only join the DC Plan if they were eligible to do so

If you joined Royal Mail Group after 1 April 2008, around two months before you reach the end of your first year of employment you will be written to with full details of the DC Plan. This will be an opportunity to change your contribution rate (if you wish to pay more than the minimum contribution rate) and to choose the funds in which you would like to invest the contributions. Alternatively, you will also have the chance to decide whether you want to opt-out of the DC Plan before your contributions start.

In February 2009, any other eligible employees who had worked for Royal Mail Group for over a year, but who had not joined another Royal Mail pension arrangement were also written to and told about the benefits available in the DC Plan.

You will automatically be included in the DC Plan for pension benefits as well as life assurance benefits, unless you choose to opt-out of the DC Plan. You must contribute at least 3% of your pre-tax basic pay to a Member Account in your own name to build up your pension benefits. Unless you choose to opt-out of the DC Plan, your contributions will be automatically taken from your wages. Also, Royal Mail Group will contribute at least the equivalent of 5% of your pre-tax basic pay on top of your contributions. You can choose to contribute more than 3% of your basic pay. If you do, Royal Mail Group would also contribute more, up to a maximum limit of 7% of your basic pay.

You may alter your contribution rate at any time. The highest 'regular' employee contribution rate is 5% of basic pay and Royal Mail Group will contribute a further 7% of basic pay at this contribution level. You may also increase the size of your pension by paying 'voluntary' contributions (but Royal Mail Group's contributions will not exceed 7%). Please contact the DC Plan Administrator using the contact details below for more information.

If you work for Royal Mail or Parcelforce Worldwide, please call 0845 606 0603. If you work for Post Office Ltd, please call 0845 601 6260.

If you would like to change your pension contribution level, please contact the Zurich Royal Mail Service Team.

If you are currently paying at a contribution level of less than 5% of basic pay, any increase you make to your regular contribution will result in an increase in Royal Mail Group's contributions also. If you contribute 5% of basic pay, you will receive the highest level of contribution from Royal Mail Group, namely 7%. You can also make "voluntary" contributions above 5% (but Royal Mail Group's contributions will not exceed 5%).

To change your contributions, you will need to send a Choices Form to the Zurich Royal Mail Service Team, or you can telephone them to make a change request.

More information on how to contact the Zurich Royal Mail Service Team.

Royal Mail Group feels that the DC Plan provides employees with the opportunity to make financial provision for the future.

As the purpose of the DC Plan is to provide a benefit which employees can access in the future (and generally in their retirement), it is not possible to provide this benefit on an immediate basis to employees. The earliest age at which you can currently receive benefits under the DC Plan is age 55 (unless you qualify to take your pension early due to ill health).

As you work part-time, your pension contributions are based on the hours you work, up to the full time equivalent hours for your job. So if you work overtime, your overtime earnings will have pension contributions deducted from them. However, any hours you work in excess of the full time equivalent for your job are not pensionable.

The money in your Member Account when you retire will be used to provide benefits.

Your Member Account builds up over time with the contributions made by you and Royal Mail Group throughout your membership of the DC Plan, plus investment returns. Costs will be deducted from your Member Account for administering the DC Plan and providing investment services.

You will have a choice about the way the contributions to your Member Account are invested.

A guide with full details of the DC Plan will be sent to you when it is time for you to choose the level of contributions you wish to make and the funds into which you would like the contributions to be invested.

Currently you may invest in the following funds:

• Global Assets
• Bonds
• Inflation Linked Bonds
• Cash
• Ethical
• Shariah

You can either choose a "Do It Yourself" option where you choose and manage your own investments from the available funds, or you can choose a "Lifecycle option" under which the funds in your Member Account would be moved into less risky funds as you approach your selected retirement age.

Further details are available in an Investment Guide which will be sent to you shortly before you are due to begin contributing to the DC Plan. A copy of all the DC Plan literature is available from the DC Plan Administrator using the contact details below or from the Trustees' website.

The Trustees of the DC Plan have delegated investment decisions relating to the DC Plan to investment managers (currently, Zurich) and will keep their performance under review and, if need be, replace them if they consider that they are underperforming.

Charges for administering the DC Plan and for providing investment services will be deducted from your Member Account. Please refer to the   DC Guide to Fund Charges (PDF 47KB) for details of the current charges applicable for each investment fund. There are no other deductions made from your contributions or from your Member Account and there are no charges currently being made for switching between investment funds.

The value of your Member Account when you retire will depend on how much money has built up in it from contributions and investment returns.

When you retire, you will be able to take a tax-free lump sum from your Member Account (up to a maximum of one-quarter of the value of your Member Account). The remainder of the money in your Member Account would then be used to purchase a pension.

You do not have to use all of your Member Account to purchase a pension for yourself but could also choose to provide a pension for a spouse/partner or dependant.

Full details of the options available to you will be provided to you when you want to take your benefits, or shortly before your selected retirement age.

You may be able to, but only if the Trustees agree. However, transfers from certain types of pension arrangements ("contracted-out" arrangements for example) are not permitted. Please contact the DC Plan Administrator using the contact details below for more information.

If you die in Royal Mail Group service, the death in service benefit will be up to four times the annual rate of your basic pay plus up to an extra two times the annual rate of your basic pay if you leave a dependant. This would normally be paid as a tax-free lump sum. (If you have death benefits under another Royal Mail Group pension arrangement, this would reduce the lump sum payable to you under the DC Plan).

Please be aware that the lump sum death benefits are only payable to the extent that the Trustees have been able to obtain insurance cover for such benefits.

The Trustees of the DC Plan decide to whom to pay benefits on your death but will take any wishes you make known to them into account. You should complete an Expression of Wish Form to name your dependants so the Trustees know to whom you would like benefits to be paid in the event of your death. From time to time, it will be necessary for you to update this form. For example, if your personal circumstances change, you should complete a new form.

An Expression of Wish Form is available from the following link:   Expression of Wish form for the Royal Mail Defined Contribution Plan (PDF 87KB).

No, but if you are contributing to the DC Plan on your death, a lump sum of up to 2 times your annual rate of basic pay would be paid to your dependant or dependants on your death.

a) If you have contributed to the DC Plan for less than three months, you will get a refund of the value of your own contributions held in your Member Account, less a deduction for tax. You will then lose the Royal Mail Group contributions (as these would not be refunded to you) and you will have no further benefits in the DC Plan.

b) If you have contributed to the DC Plan for between three months and two years, you can either get a refund of the value of your own contributions held in your Member Account, less a deduction for tax (but the Royal Mail Group contributions would not be refunded to you), or you may take a transfer value to another pension scheme of your choice. The transfer value will be equal to the entire value of your Member Account.

c) If you have contributed to the DC Plan for over two years, you can leave your total benefits within the DC Plan or request a transfer value to another pension scheme of your choice. If you leave your benefits in the DC Plan, you may be able to take your Member Account as retirement benefits at any time after age 55. Otherwise, the Trustees may transfer the value of your Member Account to a separate pension policy in your name (after first giving you notice).

Please note: if you transfer benefits into the DC Plan from another pension arrangement, you will be treated as having contributed to the DC Plan for more than two years and be offered option c) above on subsequently leaving service.

You may opt out of the DC Plan by contacting the DC Plan Administrator. You should be aware that if you do opt out of the DC Plan, your life cover will be reduced to a maximum of two times your annual rate of basic pay only and would be paid from another Royal Mail Group life assurance arrangement, and you would lose the additional cover for your dependants.

If you have only opted out of the DC Plan once, please contact the Zurich Royal Mail Service Team. You may be re-admitted as a member of the DC Plan if your Royal Mail Group employer agrees and you have not opted out of the DC Plan more than once.

Please note, if you have opted of the DC Plan more than once, you are not permitted to rejoin.

More information on how to contact the Zurich Royal Mail Service Team

The normal retirement age which applies to the DC Plan is 65. However, you may take your DC Plan Member Account as retirement benefits from your 55th birthday onwards.

You may take your pension account as retirement benefits at any time from age 55. Once you take your pension benefits you will be unable to continue contributing to the DC Plan, you would not earn any future pension benefits under the DC Plan and your Royal Mail Group life assurance benefits would reduce (and be paid from a different Royal Mail Group life assurance arrangement).

You will not be able to take your DC Plan benefits until you have reached age 55 (unless you have to stop work through serious ill health and the early payment of your benefits is approved by the DC Plan Trustees). If you are aged 55 or over and wish to take your DC Plan benefits, please contact the Zurich Royal Mail Service Team.

If you wish to leave Royal Mail Group, please talk to your line manager.

More information on how to contact the Zurich Royal Mail Service Team.

You will not be able to take your DC Plan benefits until you have reached age 55. Although the DC Plan's normal retirement age is 65, you may continue working for Royal Mail Group but take retirement benefits from the DC Plan from age 55. If you take your DC Plan benefits you will no longer be an active member of the DC Plan and your life assurance benefits will reduce and be paid from a different Royal Mail Group life assurance arrangement.

If you are aged 55 or over and wish to take your DC Plan benefits, please contact the Zurich Royal Mail Service Team.

The statutory retirement age is currently 65. If you are approaching age 65 and you wish to continue working for Royal Mail Group, please talk to your line manager.More information on how to contact the Zurich Royal Mail Service Team

If you join the DC Plan, the normal retirement age will be 65. If you stay employed after age 65, you will be able to carry on contributing to the DC Plan, and Royal Mail Group will continue making contributions too on your behalf, until you leave service, or reach age 75 if later. Your life cover would continue after age 65, provided you remain in service, but would cease at age 75.

None of Royal Mail Group, the Trustees of the DC Plan or employees of Royal Mail Group are authorised by the Financial Services Authority to give you financial advice or investment advice. The DC Plan Administrator is also unable to provide financial advice to you. If you need financial advice, you should consult an independent financial adviser (IFA). You can obtain details of IFAs by calling the IFA Helpline on 0800 085 3250, or at www.unbiased.co.uk

Note that you may have to pay for the work that an IFA carries out for you.

For any other queries please contact the DC Plan Administrator, Zurich Assurance Limited ('Zurich') as follows:

By email: royalmailserviceteam@uk.zurich.com

By phone: 0800 092 8263

By post: Zurich Royal Mail Service Team
PO Box 1073
Cheltenham
Gloucestershire
GL50 9NN

Some DC Plan documents are also available on the DC Plan Administrator's website.

The information on this part of the website provides a summary of the Royal Mail Defined Contribution Plan available to you. Royal Mail Group has made all reasonable efforts to ensure that the information provided through this website is accurate at the time of inclusion. However, it accepts no liability for any inaccuracies or omissions and reserves the right to make changes and corrections to this site at any time without notice.

The Royal Mail Defined Contribution Plan is governed by legal documents. In the event of a conflict between these legal documents and this website, the former will prevail. These legal documents may include restrictions relevant to you. This website reflects legislation as at 1 November 2009.

Royal Mail Group is not responsible for the content of any other organisation's website whose links are contained within this website. The inclusion of any such link does not imply an endorsement by Royal Mail Group.