The Plan details
» How much will it cost?
» Commitments you need to consider
» Risks you need to be aware of
The Royal Mail Defined Contribution Plan (the Plan) is a long-term investment. It’s been established by Royal Mail Group and Post Office Limited, in conjunction with the Trustees, to help you save for your retirement.
The Plan is a ‘Defined Contribution’ Pension Scheme (or ‘money purchase’ arrangement) and is provided in addition to the State Second Pension. This means that your entitlement to earn a State Second Pension is not affected should you join the Plan, although the benefits you receive from this Plan may affect your entitlement to any additional means tested benefits from the State in retirement.
Contributions are invested in the Plan. The Trustees maintain a Member Account for you that shows the value of your interest in the Plan based on contributions, any transfers, expenses and the investment performance of the investments that you choose.
The Plan will provide benefits based on the value of your Member Account when you decide to take those benefits. Your benefit choices at retirement include taking part of your Member Account value as a tax-free cash lump sum, and using the rest to buy an annuity. An annuity is a regular income for life (a pension).
As a general rule you cannot draw your benefit from the Plan until you retire. You can choose how much to pay in and how it will be invested.
How much will it cost?
Your employer makes a significant contribution into your Member Account. The following table shows the total contributions that will be invested in your Member Account.
|
You Pay |
+ |
Your employer pays |
= |
Total invested in your member account |
|
3% |
|
5% |
|
8% |
|
4% |
|
6% |
|
10% |
|
5% |
|
7% |
|
12% |
Note: If you contribute 5% of your Pensionable Pay you will receive the highest level of contribution from your employer, namely 7%. The percentages above refer to base pay without any bonuses or other allowances.
» Back to top
There are certain commitments you need to consider.
• To make regular contributions.
• To keep your money invested until you take your benefits. This means payments will be locked away until then.
• Take financial advice if you are unsure of the consequences of your decisions.
» Back to top
There are important risks which you need to be aware of.
• The value of your Member Account can go down as well as up – what you get back is not guaranteed.
• The levels of risk and potential investment performance differ depending on the Investment Funds you choose.
• Your Member Account may not provide the income you expect. For example, investment growth throughout your membership of the Plan or Annuity Rates (or both) could be lower than expected at the time you take your benefits.
• Over time, inflation will reduce the buying power of money. For example, if inflation is 2.5% a year, then in 20 years’ time, £10,000 will buy only the same as £6,100 buys today.
• Tax rules can change.
• Charges levied on the Investment Funds may increase.
» Back to top
If you require more help with retirement planning – contact an Independent Financial Adviser »
