Welcome, one and all, to Ben's blog

Hello Royal Mail, one and all, and welcome to this, the first in a series of blogs to help you understand more about your pension savings in RMDCP and about pensions more widely.

Did you know that your pensions are likely to be the biggest part of your wealth in retirement? For many, it will be worth more than your house. That’s why it’s important to understand your pensions.

I’m Ben Piggott and I’ve been Plan Secretary for the RMDCP since 2014. Before that, I was an Investment Consultant at JLT Group advising schemes on their investment strategy. I live in Sussex with my wife and three children, including our new baby, Isabella. Working from home has been a challenge and I’m sure all of us have had to adapt following the COVID-19 outbreak. As a, pretty much, outsider (I’ve never worked in operations), it was great to see the Royal Mail keeping the nation connected earlier this year when lockdown first hit, and I was extremely proud to be a part of something that was so vital to so many. It may have inspired me to join the Christmas operations!

The Plan has grown massively in the 6 years since I joined, and we now have around £800 million invested for you. My greatest joy though, hasn’t been the rise in assets, but that Royal Mail increased the amount of money they pay to members’ pension pots, and automatically move members to the top contribution rate (Tier 3). Royal Mail now puts in 10% and you put in 6% tax free. Who doesn’t want an extra 10% contribution from their employer! Across the UK, according to ONS, less than 1 in 7 people in “DC” schemes like RMDCP, enjoy such high contributions from their employer. And broadly, this amount of contribution keeps you on track for a comfortable retirement, assuming you save like this for your working life. My rule of thumb for saving for later life is that, if you want a chance of something half sensible in retirement, you should save at least 15%. The best thing with RMDCP is that it happens automatically - you don’t have to lift a finger. Your annual benefit statement will show you what your savings might look like when you get to retirement. If you have a rule of thumb in relation to saving, please let me know.

So, what is “DC” and why is RMDCP different from the other Royal Mail scheme, RMPP, which is a defined benefit “DB” scheme? Broadly, defined contribution schemes don’t target what you get out, they only specify what you put in. Then, at retirement, you have to decide how to make that money work for you. Whereas a “DB” scheme like RMPP targets what you get in retirement based on how long you were in the scheme, and the employer must make sure that happens - it’s guaranteed.

If you have been paying into RMDCP for 5 years you are eligible to join the RMPP. I did. It pays more in, and, it is guaranteed by Royal Mail so even if investment markets go down, you still get what you (and Royal Mail) paid in, when you reach age 65. Each year, if the scheme is in good shape, a small bonus is added, and that is guaranteed too. My RMDCP pot is still there and its invested in high risk and reward investments because I know that I’m a long-term investor and won’t be taking my money for another 25 years. And DC schemes are more flexible so you can decide what to do with your money (and when), later in life. With three daughters, I feel like I’m going to need some flexibility around my finances.

You have probably heard, Royal Mail are aiming to launch a new type of scheme, “Collective DC”. It’s a bit like a DB scheme in that it targets what you get out (a pension income based on how long you worked) but it’s not guaranteed by Royal Mail. The benefits of investing collectively mean that the Trustees can have more scope to add value, and they can aim for more rewarding investments because you won’t take your money at retirement age. You’ll hear more about this new scheme next year.

There are two websites for RMDCP:

• A Scottish Widows site, scottishwidows.co.uk/save/royalmaildcplan/, that has all the information you need to find out anything for your account. If you want to contact Scottish Widows, the Plan is supported by a dedicated service team - they will know exactly what your question is about, and the Helpline goes straight through, there’s not twenty options to select.
• Also, the Trustees have their own website, rmdcp.uk and this is to help you find what you want and to get more from RMDCP. In the ‘Get in touch’ page, there is a ‘Suggestions for the Trustees’ box where you can post a question or comment to the Trustees.

I often ask people about RMDCP and they say, I think I have one of those. As part of my role, my aim isn’t to make you a pension specialist, but I do want you to value your RMDCP savings. They should be a proud part of your overall wealth. And the aim of this blog is to help you.

It would be great to hear from you, let me know what you think of this blog, and what RMDCP means to you. And please let me know what you want to hear about in the next blog. There’s lots to cover, so drop me a line using the ‘Suggestions for the Trustees’ box and I hope to have some more content for you, very soon.

Wishing you all the very best,

Ben