Over 100,000 Royal Mail employees will now receive a cash lump sum and an income in retirement thanks to the launch of the UK’s first Collective Defined Contribution pension plan.
In partnership with the Communications Workers Union (CWU) and Unite CMA, Royal Mail worked to design a scheme that provides one pension for all employees with at least 12 months service; is affordable for Royal Mail and its people; and provides an income in retirement. Most Royal Mail employees will join the Collective Plan automatically.
Angela Gough, director of group pensions, Royal Mail, explained, “The Collective Plan is the future of pensions at Royal Mail and we believe it is the right scheme for our people and our company. Today heralds an exciting development for Royal Mail and for the pensions industry. We have worked hard with our unions, the government, the Pensions Regulator, and the Trustee of the Collective Plan to make it possible and we are delighted to have reached this point.”
The key benefits of the Collective Plan are:
- An automatic income for life, in addition to a cash lump sum, making it easier for people to manage their money in retirement;
- Employees pay 6% of pensionable pay into the collective pot each payday, as Royal Mail tops that up with a contribution of 13.6%;
- One plan for everyone – every employee with at least a year’s service is eligible to join.
Andy Furey, national officer, CWU, commented, “The CWU is pleased to see the introduction of the UK’s first Collective Pension Plan which heralds a new pensions era and applies to all our Royal Mail and Parcelforce members once they have a year’s service.
“We are confident the innovative benefits within the Collective Plan will provide a better outcome for our members than a traditional Defined Contribution scheme. The twin attributes of an income for life and a guaranteed lump sum at retirement are important benefits for our members.”