Plan Guide The Royal Mail Defined Contribution Plan - Get started here - Zurich
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Plan Guide
The Royal Mail Defined Contribution Plan
Get started here
Contents
Introduction 04
How the Plan works
Joining and contributions 05
Voluntary contributions 10
Investments 10
Absence 15
Leaving the Plan 16
Taking benefits 17
Benefits on death 18
How do I:
Keep track of my Member Account? 19
View and make changes to my
Member Account? 19
Make other changes? 19
Get more information about the Plan? 19
Tell my employer about changes to
my personal information? 19
Get in touch? 19
Make a complaint? 19
Get financial advice? 20
Further Information
Glossary 21
State Pensions 22
Help from external organisations 22
Disclaimer and Data Protection 23
What do I need to do? 24
2
Welcome
This Guide gives you some helpful information about the Why save into a pension?
Royal Mail Defined Contribution Plan (the Plan).
To have a comfortable life after giving up work you’ll
The Plan is a registered pension scheme under Finance probably want more than the State Pension alone. For
Act 2004. most people, saving something is better than nothing and
You can find more information about the Plan on the it is seldom too late or too early to start.
website at zurich.co.uk/save/royalmaildcplan. Can I opt out?
You can find more information and guidance regarding You can choose to opt out of the Plan or stop your
your wider pension options at the Trustees’ website at contributions. If you want to, the ‘What if I do not want to
rmdcp.uk. join or decide to stop paying contributions?’ section of this
Terms shown in bold are described in the Glossary. Guide explains what you would need to do.
What do I need to know? What are my other choices?
You don’t have to do anything to carry on saving into the Once you are enrolled into the Plan you can choose
Plan but you do have choices and these are explained in to change:
this Guide. You will build up a pension pot, which we call • Your Selected Retirement Age
your Member Account. You can make choices about it,
such as where it is invested, but you don’t have to. • Where your savings are invested
What’s in it for me? • Your contribution level.
You’re not the only one paying in. Your employer also Please refer to the ‘Joining and contributions’ and
contributes and you get tax relief on your contributions ‘What do I need to do?’ sections to explore your choices in
through payroll without you having to take any action. So, more detail.
some of the money that would have gone to the Is there anything I need to do?
government in the form of tax goes into your Member
Account instead and reduces the cost to you of your As well as the pension savings you will build up in the
contributions. Plan, you are covered for life assurance whilst you work
for Royal Mail Group. It is worth taking a few minutes to
It is easy for you to get started and begin saving for complete an Expression of Wish form so that the Trustees
retirement. Your current contribution level will depend on know who you would like to receive this benefit should
when and how you joined (see the ‘Joining and contributions’ you die.
section) but you can choose to increase this. This Guide
explains when you can increase your contributions and What if I have any questions?
what your employer pays. Please contact the Zurich Royal Mail Service Team with
As a member of the Plan you also get free life cover, to your pension questions. See the ‘What do I need to do?’
provide benefits for your loved ones (see the ‘Benefits on page for contact details.
death’ section for more details). More information on pensions and saving for later life can
be found at: gov.uk/workplace-pensions.
3
Introduction
How it works?
Contributions Investments Benefits Retirement
You pay Your Member Secure lifelong income
regular Account
contributions* You can use some
You choose or all of your retirement
when to take savings to buy an annuity,
your benefits which provides you with a
regular income for the
rest of your life.
This income is taxable.
You can also take up to 25%
as a tax-free lump sum.
Life assurance
Lifecycle paid for by
/Or
option your employer
Your employer or Flexible income
also pays
a regular Do It You can keep your
contribution Yourself retirement savings invested
and take a regular taxable
income and/or one-off
taxable payments from
your savings. You can also
take up to 25% as cash,
tax free.
/Or
Cash lump sum
You can take some or all
Your voluntary
of your retirement savings
contributions
as a lump sum - 25% is
(optional)*
tax-free.
*You don’t pay income tax on these, which means it may cost you less than you think.
Not all options are available within the Plan. Your contributions will be paid to the Plan via
pensions salary exchange (PSE), if you are eligible. 4
Joining and contributions
When can I join? Enrolled on your 12 month service anniversary What choices do I have?
Your employer will write to you when you are eligible to If after 12 months’ service you have not started paying When you first join, you’re set up as a member without
join the Plan for pension benefits. Until then you will be contributions to the Plan, you will be enrolled for pension having to make any choices.
covered for life assurance benefit, either through this benefits at that point. The only exceptions are if:
You’ll receive details about how to log onto the secure part
Plan or a separate arrangement. • you are still under 18, in which case you will start of the website soon after you start contributions to the
There are two types of members – those enrolled paying contributions on your 18th birthday, or Plan. Here you can:
automatically (or who choose to opt-in) and those enrolled • you are over age 64. • Change how your savings are invested (the Lifecycle
after 12 months’ continuous service.
How do I join? option with a 10 year switching period applies until you
Enrolled automatically make your own choice)
Enrolled automatically or opt-in
The government has introduced a law designed to help • Ask to opt out.
people save more for their retirement. It means employers You will receive information about the Plan before being
must give workers access to a workplace pension scheme automatically enrolled and, unless you ask to opt-in, you If you don’t have access to the internet, you can tell the
and automatically enrol certain categories of worker into do not need to complete any paperwork to join. You will be Zurich Royal Mail Service Team and they can take your
a workplace pension scheme. sent information about the choices available to you, once instructions over the phone (0800 092 8263). You can
you’ve joined. also use this telephone service to change your Selected
For Royal Mail Group this law came into force on Retirement Age (this is 65 unless you tell us otherwise).
1 November 2012, with most of its employees not already If you wish to opt-in, you will need to complete a Choices
Zurich may record or monitor calls to improve their service.
contributing to one of its pension schemes, being form, which is available from the website or by calling the
automatically enrolled into the Plan on 1 February 2013. Royal Mail Pay Services Team.
Automatic enrolment into the Plan applies to most new Enrolled on your 12 month service anniversary or after
employees after 3 months of service. Anyone not You will receive information about the Plan before being
automatically enrolled can “opt-in” at any time (in other enrolled on your 12 month service anniversary and you
words, choose to join voluntarily). You will receive more will not need to complete any paperwork.
information when you join Royal Mail Group and as you
approach your automatic enrolment date.
5
How much does it cost?
You will pay a regular contribution, taken from your Pensionable Pay, into the Plan. You can choose to pay more if you wish.
Your contribution level depends on what type of member you are, as explained below:
When did In your first year of employment On your 1 year anniversary of
After working for Royal Mail
you join (whether you were automatically employment or 18th birthday
Group for more than a year
the Plan? enrolled or opt-in) if later
Entry Level Life cover is provided but no
contributions are paid into the
After 3 months
Plan in your first year
(or earlier date if opting in)
Regular or 18th birthday if later
contribution You pay RMG pays
in your first 5% 3%
year of
employment of Pensionable Pay during your
first year of service
Choose to Are
If you... Opt-in change your enrolled
contribution rate automatically
Standard Level
You can choose one of the contribution rates shown below: Entry Level
Regular
contribution You pay Your employer pays You pay RMG pays
after your 4% 8% Tier 1 5% 3%
first year of 5% 9% Tier 2
of Pensionable Pay
employment 6% 10% Tier 3
of Pensionable Pay
6
How are contributions made to the Plan? Your participation in PSE is a change to your terms and Standard Level
conditions of employment and you will be deemed to have If you join at the Standard Level you will be set up to
For eligible employees, contributions to the Plan are accepted the change if you do not opt out. It is therefore
automatically made via pension salary exchange (PSE), pay a 6% contribution and your employer will pay 10%. If
important that you read and understand the information you wish to change your contributions, you need to complete
which is a more efficient way of making contributions to on PSE at: http://www.myroyalmail.com/pensions.
the Plan. In brief, your entitlement to your pay is reduced and return a Choices form available from the Zurich Royal
by an amount equal to the pension contributions you You can opt-out of PSE and still be a contributing member Mail Service team or from zurich.co.uk/save/
would usually make. Royal Mail Group then pays this of the Plan. If you do not wish to participate in PSE, please royalmaildcplan. Once you are paying contributions at the
amount to the Plan on your behalf along with its usual contact Royal Mail HR Services on 0345 6060 603 for Standard Level you can not reduce your contributions
employer contribution. Making pension contributions via further information and to request a PSE opt out form. below 4% of Pensionable Pay or pay contributions at the
PSE means: Entry Level.
Entry Level
• you can save National Insurance Contributions (NICs), if If you join the Plan in your first year of employment (whether
you pay them; automatically enrolled or opted in), you will pay 5% of Example for someone who is automatically
• the Plan still receives the same amount of pension Pensionable Pay during the first 12 months of service. enrolled (Entry Level)
contributions in total; Your contributions will then increase automatically to the 6%
If you earn £300 a week, a 5% contribution is £15 a
Standard Level rate. At that point, you can choose to pay
• the amount of money you take home each week or week but your take home pay only goes down by £12
one of the other Standard Level contribution rates.
month is increased by the amount of any NIC saving a week - due to tax relief. The total amount invested in
you make, and; If you join on your one year anniversary or 18th birthday if your Member Account, including your employer’s
later (because you didn’t meet automatic enrolment criteria contribution, would be £24 a week.
• PSE is designed not to affect your other Royal Mail and did not elect to opt in) you were provided with life cover
benefits such as overtime, bonuses, sick pay and life in the first year (or until your 18th birthday) but did not After a year of employment, your contribution rate will
assurance cover which continue to be based on your contribute to the Plan. Your contributions will then automatically increase to 6%. If you are still earning
pre-PSE salary or wages. commence at the 6% Standard Level rate. At that point, you £300 a week, your contribution will go up to £18 a
Royal Mail Group automatically enrols you into the Plan via can choose to pay one of the other Standard Level week although tax relief means that your take home
PSE providing your pay after PSE is over the PSE participation contribution rate Tiers. pay will only go down by £14.40 a week. Your employer
limit (which for the year 2019/20 is £10,000 a year - that’s If you join after working for Royal Mail Group for more than will pay a contribution of £30 a week, giving a total of
£833 a month or £192 a week). Other eligibility conditions a year and later than your 18th birthday, you can choose to £48 a week going into your Member Account.
also apply for PSE and further information can be found at: increase contributions from the Entry Level rate to one of
http://www.myroyalmail.com/pensions. the Standard Level rates. If you wish to increase your
contributions, you need to complete and return a Choices
form from zurich.co.uk/save/royalmaildcplan, otherwise
your contributions will stay at the Entry Level.
7
How much should I save in the Plan? How do I save tax by being a member? Your choices depend on what member type you are:
The online pension planner tools at zurich.co.uk/save/ Your employer takes your contributions from your pay If you are enrolled automatically
royalmaildcplan can give you an idea of how much pension before taking off income tax. You only pay tax on what’s You cannot decide that you do not want to join the Plan.
your and your employer’s contributions are likely to buy left. So whether you pay tax at basic, higher or additional Nor can you opt out of the Plan until you have been
when you come to take your benefits. rate you get the full tax relief on the contributions you automatically enrolled. This is to comply with legislation
pay. For example, if you pay a contribution of £18 a week and not something that the Trustees or Royal Mail Group
You can also use the online budget tool, so you can work
and you are a basic rate tax payer, the cost to you after can override.
out how much you can afford to save.
tax relief is £14.40.
Once enrolled you’ll receive log in details for a secure
In this example, the £18 a week taken from your pay website. Here you can opt out of the Plan within 1 month
before income tax, saves £3.60 in tax payments and the of receiving your welcome pack. If you don’t have access to
cut in take-home pay is only £14.40 a week. Your the internet you can call the Zurich Royal Mail Service Team
contributions will be paid to the Plan via pensions salary and they will take your instruction over the phone. If you
exchange (PSE) if you are eligible (see the previous page opt out within the 1 month period, you will receive a full
for further details). refund of your own contributions through payroll and be
treated as never having been a member of the Plan.
What if I do not want to join or decide to stop
paying contributions? If you do not opt out within the 1 month period but decide
later that you want to stop your contributions, you need to
If this happens, you will need to rely on other savings and contact the Zurich Royal Mail Service Team and they will
State benefits. Your employer will not pay into another explain the process to follow. Treatment of your benefits
pension arrangement. will depend on how long you have been a member of
All Royal Mail Group employees are provided with life the Plan.
assurance, either through the Plan or through a separate The ‘Leaving the Plan’ section of this Guide provides more
arrangement. The value of the benefit will be less if you details on the choices open to you if you decide to stop
decide not to become a member of the Plan or stop making contributions to the Plan.
making contributions to the Plan (see the ‘Benefits on
Death’ section). You will normally be automatically re-enrolled into the
Plan every three years, even if you have opted-out or
decided to stop your contributions. You will be notified at
the time and following your automatic re-enrolment you
may choose to opt out or stop your contributions in the
same way, if you want to.
If you change your mind and want to opt-in to the Plan,
you are free to do so up to age 74.
8If you are enrolled on your 12 month service anniversary If you become a contributing member through
You do not have to join the Plan for pension benefits. If auto-enrolment
you choose not to do so, you should contact the Zurich You can opt out by calling the Zurich Royal Mail Service
Royal Mail Service Team before your 12 month service Team or using the on-line service. You must complete and
anniversary. submit your opt out request within 1 month of the Zurich
Royal Mail Service Team sending you full Plan information
Once you’ve started contributing, you can choose to stop.
in order to receive a refund of any contributions made
You will need to contact the Zurich Royal Mail Service Team
either via PSE or deducted from your earnings if you did
for further details about the process and your options.
not participate in PSE. Contribution refunds are made
You may be automatically enrolled, at some point in the through Royal Mail Group payroll. Please be aware that if
future. This is to comply with legislation and beyond the you are weekly paid, it is likely that several weeks’
control of the Trustees or Royal Mail Group. You will have contributions would be paid before they can be stopped.
the right to opt-in if you change your mind and wish to
In all other circumstances (see below), then the Zurich
re-join.
Royal Mail Service Team processes your pension benefits in
Can I transfer benefits from another pension line with the Rules of the Plan. This may include a refund,
scheme? while legislation permits.
It may be possible to transfer benefits into the Plan from If you become a contributing member on your
previous pension arrangements. Individual transfers are 12 month service anniversary or age 18 if later (or
accepted at the Trustees’ discretion. Please contact the you opt-in and are not affected by auto-enrolment)
Zurich Royal Mail Service Team for further information. If you joined the Plan after 1 October 2015 and then leave
the Plan after 30 days of membership, then a refund is not
If I opt out, can I have a refund on my possible under legislation. However, your Member Account
contributions? would remain invested in the Plan; although the Trustees
Yes, in certain circumstances. may transfer your Member Account to a separate pension
policy in your own name (after giving you notice).
Alternatively, you can transfer the value of your Member
Account to another pension scheme, or you can take your
benefits from age 55 onwards.
9Voluntary Investments
contributions What affects the value of my Member Account?
Can I make extra contributions to the Plan? Contributions
It is possible to pay voluntary contributions in addition to These come from:
your Entry, Interim or Standard contributions. Limits
apply to voluntary contributions taken through payroll You Your employer
where necessary, to meet other liabilities (such as the
payment of National Insurance).
Should you decide to pay voluntary contributions, the Investment returns
Investment returns can go up and down over time,
amount of these contributions will not change automatically so the value of your Member Account may also go
if your regular contribution level increases (for example, up and down over time.
you move from the Interim Level to the Standard Level).
What’s the maximum extra payment I Charges
can make? Charges will be taken from your Member Account. Details of the
current charges are shown in the Investment Summary.
If you wish to pay additional pension contributions, your
contributions to the Plan may have to be restricted (to a
maximum of around 85% of pensionable pay) to ensure
that any normal regular deductions can still be made from
your earnings. However, if your contributions exceed the What are investment returns?
Annual Allowance you may be subject to a special tax
If you wanted to save for a new car or a holiday, you might be invested in different types of investment funds (made-
charge. A tax charge also applies if your Member Account
open a savings account with a bank. In return for your up of shares, bonds or a mixture), and each investment
(plus the value of other pension benefits) grows by more
savings, the bank will usually give you interest, which can fund offers a different potential return on your money –
than the Lifetime Allowance. These limits will not affect
help your money grow, if it keeps up with inflation. usually the higher the potential return, the greater the
most members.
risk of a sharp fall in value. The Investment Summary
The aims of investing your Member Account are similar.
If you participate in PSE (see the ‘Joining and contributions’ provides an explanation of the levels of risk and return
The key difference is that the value of your Member
section for further details) then your voluntary contributions associated with each investment fund offered under the
Account can go up or down, so there is no guarantee that
will also be made via PSE. Plan. More details can be found in the ‘What investment
you will get back more than has been paid in and you may
fund choices are there?’ section.
get back less. This is because your Member Account will
10Why not just use a savings account? The intention is to achieve higher returns in your earlier If you find you have to retire early, the Default Lifecycle
years, when your savings can afford to ride the ups and option may not have started moving your Member
The difference with pension schemes is you get extra downs of the stock market. As you move to middle-age, Account to lower risk funds. Should you be planning to
money from your employer and tax relief on your your savings are gradually moved from the Blended Equity retire earlier or later than the Normal Retirement Age
contributions, so you would miss out on these if you just Fund (which aims for long-term growth) to the Diversified of 65, you can choose a Selected Retirement Age that
used a savings account. Assets Fund (which aims for stable growth). These two suits you. The Default Lifecycle option will start to switch
Pension scheme investment funds can provide a better stages form the accumulation phase. Then, as you near your Member Account ten years before the age you
rate of return compared to savings accounts, although as retirement and need greater certainty the Default choose. The Plan’s Normal Retirement Age of 65
already noted their value can go down as well as up. Lifecycle option gradually moves your Member Account applies if you do not choose a Selected Retirement Age.
to lower risk funds that aim to protect its value.
Where is my Member Account invested? You can see how the Default Lifecycle option works in the
The move into the protection phase will start ten years graph below.
When you join the Plan, all contributions are invested in before your Selected Retirement Age. This is the
the Default Lifecycle option. You will then have the choice The left of the chart shows the two stages of the
‘switching period’.
of selecting your own investments through the Do It accumulation phase i.e. ending 10 years before the
Yourself option. You can change how your Member The Default Lifecycle option is designed for those people Selected Retirement Age. Over the 10 year switching
Account is invested at any time, through the Plan website planning to take all of their Member Account as a cash sum. period, the Member Account gradually moves from
or by completing and returning a Changes Form which investments aiming for growth to finish invested around
There is no guarantee that returns from the Default
can be found at zurich.co.uk/save/royalmaildcplan. More 25% in the Cash Fund and 75% in the Diversified Bonds
Lifecycle option will be better than choosing the Do It
information on investing your money, including details of Fund.
Yourself option for investing your Member Account.
the funds, is in the Investment Guide or the Investment
Summary leaflet at: zurich.co.uk/save/royalmaildcplan.
10 Year Royal Mail Lifecycle Strategy
How the Default Lifecycle option works 100% Cash
How your Member Account is invested
The Lifecycle option makes investing easier because you 90%
Diversified
do not need to make any decisions about where you invest 80% Bonds
your Member Account. The Default Lifecycle option uses 70% Diversified
an investment strategy which changes depending on how 60% Assets
many years away from retirement you are. It has two aims:
50% Blended
• the first aim is to give your Member Account high 40%
Equity
potential for growth, and 30%
• the second aim is to protect the value of your Member 20%
Account closer to retirement. 10%
0%
10 9 8 7 6 5 4 3 2 1 0
Years to Selected Retirement Age
11What are the Alternative Lifecycle options? The Do It Yourself option
5 Year Royal Mail Lifecycle Strategy 10 Year Royal Mail Annuity Strategy What investment fund choices are there?
This strategy is the same as the Default Lifecycle option This strategy is designed for those people planning to use
The investment funds listed below are available through
except the switching period is 5 years instead of 10 years. their Member Account to provide a lifetime income.
the Do It Yourself option.
When you are younger the Lifecycle option invests the When you are younger the Lifecycle option invests the
You can also choose to invest in the Lifecycles as part
savings in your Member Account in the Blended Equity savings in your Member Account in the Blended Equity
of this option. More information about the Lifecycle
Fund, gradually moving to the Diversified Assets Fund to Fund, gradually moving to the Diversified Assets Fund to
options can be found in the Investment Guide and the
provide long-term and then more stable growth. provide long-term and then more stable growth.
Investment Summary.
As you approach your Selected Retirement Age your As you approach your Selected Retirement Age your
Active Emerging Market Equity
pension savings are gradually moved into the Cash Fund pension savings are gradually moved into the Cash Fund
and Diversified Bonds Fund. This aims to help protect and Annuity Bonds Fund. This aims to help protect against The Active Emerging Market Equity Fund invests in
against short-term market movements and lowers the short-term movements in markets and changes in the equities (also known as shares) of emerging market
risk reward of your investments. cost of buying a pension. companies, aiming to achieve long term growth. The
shares are actively chosen by the manager with the
When you reach your Selected Retirement Age your When you reach your Selected Retirement Age your objective of outperforming the emerging market equity
Member Account will be invested approximately: Member Account will be invested approximately: index. The value of equities can go up and down sharply
• 75% in the Diversified Bonds Fund and • 75% in the Annuity Bonds Fund and – particularly in the short-term.
• 25% in the Cash Fund. • 25% in the Cash Fund. Active Global Equity
The move into the Diversified Bonds Fund will start The move into the Annuity Bonds Fund will start The Active Global Equity Fund aims to achieve long term
5 years before your Selected Retirement Age. 10 years before your Selected Retirement Age. growth, but accepting some shorter term volatility
associated with investing in equities (shares). This fund
invests in shares of UK and overseas companies which are
actively chosen by the manager with the objective of
outperforming the global equity index.
Annuity Bonds
The Annuity Bonds Fund invests in fixed interest
government bonds (gilts) and corporate bonds issued by
UK companies.
The Annuity Bonds Fund can provide stability as you draw
closer to your Selected Retirement Age as the cost of
buying a pension varies and depends partly on the price of
bonds. Moving savings in your Member Account into the
Annuity Bonds Fund when you are close to taking your
benefits can help protect the value of the pension you buy.
12Blended Equity Ethical How do I choose how to invest my Member
The investment manager(s) of the Blended Equity Fund The Ethical Fund invests in UK and overseas shares. Account?
use their expertise to try to achieve a return above It aims to invest in companies that have adopted approved You need to strike your own balance between the risk you
inflation over the longer-term and to protect against governance structures. It avoids investment in certain wish to take and the return you need from your
falling share markets. A diversified range of traditional industries. As with the Shariah Fund, the range of investments. Before you decide, make sure you consider:
and alternative asset classes are used to achieve this. investment opportunities may be restricted due to the
1. How close you are to retirement
Cash nature of the fund.
This fund is composed of short-term cash investments 2. How much you can afford to contribute to your pension
Inflation-linked Bonds
but is not a deposit account. The value can go down as This fund invests in government bonds (gilts) with an 3. Your other savings or investments
well as up. If you are about to take your benefits, moving interest rate tied to inflation. It aims to minimise the 4. How much money you will need to live comfortably in
some of the savings in your Member Account into the conversion risk of buying a pension which increases with retirement
Cash Fund could help protect the value of any tax-free inflation. It can be used in a similar way to the Annuity
cash lump sum you might want to take. 5. Whether you are a cautious investor or are comfortable
Bonds Fund and is most suitable for members wishing to
taking some risk in the hope of a greater investment
Diversified Assets buy a pension that will increase each year.
return.
This Fund aims to provide more stable returns than Passive Global Equity
funds that invest in one type of asset, by investing in a If you don’t want to decide where to invest, the Lifecycle
The Passive Global Equity Fund invests in equities options will automatically move between investment
mix of growth assets such as equities, commodities and (also known as shares) of both UK and overseas
high-yield bonds. funds. This approach may not necessarily produce the
companies, aiming to achieve long term growth. The value best returns or match your attitude to investment risk.
Investing in a mix of assets can mean that if one asset is of equities can go up and down sharply – particularly in You can switch between Lifecycle options and to the Do It
performing poorly, it could be offset by a better performing the short-term. yourself option, and you can invest in a Lifecycle and the
asset. This is because not all assets react to market Shariah Do It Yourself option at the same time.
conditions in the same way.
The Shariah Fund invests in shares. Shariah investment is If you want to take an active role in managing your pension
Diversified Bonds a way of investing that complies with Islamic Shariah savings, or feel that none of the Lifecycle options are right
The Diversified Bonds Fund invests in government bonds, principles. for you, then you should choose the Do It Yourself option.
corporate bonds and derivatives with the aim of producing As this Fund has some limits on the companies in which The table on the next page compares a Lifecycle option to
positive returns irrespective of market conditions. it can invest, it does not have as many investment the Do It Yourself option.
The Diversified Bonds Fund can therefore provide stability opportunities open to it as, for example, the Passive Global
if the absolute value of your benefits at retirement is Equity Fund.
important, for example if you want to take your whole You can find further information about these investment
benefits as a cash lump sum. funds in the Investment Guide and Investment Summary.
13You can use the Fund Information Sheets to find out more
Lifecycle options Do It Yourself option
information on where the funds are invested, their aims
What is Investment strategies that automatically You create your own investment mix from the and past performance. The Investment Guide also gives
involved? switches your Member Account from higher range of eleven funds, choosing funds that suit more detail on each of the investment funds. Both of
risk investments into lower risk investments as your own needs and attitude to risk. these are available on the website.
you approach retirement.
What are the charges?
Who makes The Trustees (with specialist investment You decide on the asset mix, but the Trustees Charges for managing the Plan and providing investment
the decisions? advice) choose the asset mix and decide on the investment managers. and communication services are deducted from your
investment managers. Member Account. The Investment Summary contains
What should Because the lifecycle options switch funds If you don’t regularly review your investments details of the current charges.
I consider? automatically before you retire, they don’t take – particularly as you approach retirement The annual benefit statements you receive from Zurich,
into account what’s happening in the markets at – you may find that the value of your on behalf of the Trustees, reflect an estimate of the
the time. This means you may be switched Member Account falls and you are left with charges to be deducted and the effect on the future value
from good-performing funds to funds that lower retirement benefits than you might of your Member Account.
perform less well. However, the overall risk in have expected.
your Member Account will be reduced as you Investment charges are taken from some of the investment
approach retirement. funds each day before calculating the fund’s value.
Because of this you may not see all investment charges on
What would I You will need to consider which lifecycle best You will need to select investment funds that your benefit statements but you will see the charges for
have to do? fits the way you intend to take the benefits take into account your savings goals, attitude managing the Plan and providing communication services.
from your Member Account at retirement. to risk and how long you will be investing for. Charges taken will affect the return on your Member
You will need to review your strategy regularly Account. Each fund has different charges. If a fund has
You should review your choice regularly,
to check it is helping you achieve your savings higher charges, you should make sure you are happy that
to check that your selected lifecycle is helping
goals – and if it’s not, you should reconsider it offers the potential for greater growth or protection
you achieve your savings goals.
your choices. from risk, to make this extra cost worthwhile.
Where can I Read the ‘Lifecycle option’ sections. Read the ‘Do It Yourself option’ section.
find out more? Consider speaking to a financial adviser. Consider speaking to a financial adviser.
14Absence
What if I am absent from work?
Most absences for short periods will not affect your
membership of the Plan. However, your employer and the
Trustees decide if you can continue as a member of the
Plan if you are off work for a long time. Your employer
decides whether the contributions will continue and if you
remain covered for life assurance benefit and for how long.
You may pay voluntary contributions on your return to
work if you wish to make up for any shortfall in your
regular contributions during your period of absence.
What If I’m on maternity/paternity/adoption
leave?
You will continue as a member of the Plan while on paid:
• maternity leave
• paternity leave, or
• adoption leave.
Your contributions will continue, based on your actual pay.
Your employer’s contributions also continue but based on
the Pensionable Pay you would have received if you were
working normally.
You may pay voluntary contributions on your return to
work to make up for any shortfall in your regular
contributions during your period of absence.
15Leaving the Plan
If you have been a member of the Plan for…
At least 30 days and What happens to my Member Account if,
Less than 30 days after leaving, I leave it in the Plan?
You are under You are age 55
age 55 and over You won’t be able to pay any more contributions into your
Member Account. You can still change the investment
You can leave your Member You can start to receive pension The value of your Member Account funds within the choices offered by the Plan. The value of
Account invested in the Plan and benefits immediately in respect of your contributions your Member Account will continue to move in line with
take your pension benefits from OR you can leave your Member (that were not made via PSE), the performance of the funds you’ve chosen to invest in.
age 55 onwards. However, the Account invested in the Plan. will be refunded less tax (currently
Trustees may transfer your However the Trustees may 20% on refunds up to £20,000 and How do I transfer my benefits to another
Member Account to a separate transfer your Member Account to 50% on the excess of refunds above pension scheme?
pension policy in your own name a separate pension policy in your £20,000) plus investment growth
(after giving you notice) (if any) on your contributions If you want to transfer your benefits to another pension
own name (after giving you notice) scheme you should ask the Zurich Royal Mail Service
(you are responsible for paying tax
OR you can transfer the value of OR you can transfer the value of Team for a statement of the transfer value of your benefits
on this part of the refund via your
your Member Account to another your Member Account to another and details on how to transfer. The value actually
tax return or direct to HMRC).
pension scheme. pension scheme. transferred will be the value of your Member Account on
Note: you lose the benefit of the the day your benefits transfer.
employer contributions made on
your behalf, as these are not What if I have been offered membership of
refunded to you. If you have made the Defined Benefit Cash Balance Scheme?
contributions to the Plan via PSE
Some members will be able to join the Cash Balance
then your employer will make a
Scheme. If you are offered membership to the Cash
special payment to you of your PSE
Balance Scheme, you may benefit from increased
contributions, less deductions for
contributions by Royal Mail Group. However, you may be
tax and National Insurance.
better off remaining in the Plan.
If you are automatically enrolled then you will be able to opt out within 1 month of being notified that you are a member. Carefully read the information that you have been sent,
Your contributions will be returned through payroll and you will be treated as never having been a member of the Plan. before making a decision. *
Please note that it is not possible to transfer the value of
your Member Account to the Cash Balance Scheme.
* More information is provided on rmdcp.uk by the
Trustees to help you with your choices.
16Taking benefits
When can I take my benefits? You can use some of your Member Account to purchase How much will my benefit be?
a pension for your spouse or civil partner or another Information on your retirement choices is provided six
You can choose the age you take your benefits. Retirement Dependant after your death, via the Annuity that you
no longer has to mean finishing work – it can mean months before the date you expect to take your benefits
choose. For example, you can choose that one half of the
reducing your hours, with your employer’s agreement, as (your Selected Retirement Age). The pension you receive
pension that you receive from your Annuity will continue
you approach retirement. depends on the decision you make at your Selected
to be paid to a spouse, civil partner or Dependant. If you
choose this option, the pension that is paid to you for your Retirement Age.
The Plan’s Normal Retirement Age is 65. However, you
can take your benefits from age 55 or earlier if you are ill lifetime will be lower than it would have been if you had You can use the planner on the website to get an
and cannot work. You don’t have to take your benefits purchased an Annuity on your life only. illustration. This will give you an idea of the pension your
until age 75 at the latest. retirement savings could possibly provide. It can also show
You may be able to buy a higher pension if you are in ill
health or there is a reason why your life expectancy may you how much more you could get if you increase your
What choices do I have? contributions.
be reduced.
You have three broad choices and, based on your individual You can also ask for an illustration from the Zurich Royal
circumstances, choosing how to take your benefits can be 3 Flexible income (drawdown)
Mail Service Team. Your annual benefit statement will also
complex. Royal Mail will pay for financial advice to help you If you want flexible access to your money, you may want
to look at drawdown which keeps your retirement savings provide an illustration.
make the appropriate choice.
invested and allows you to take a regular taxable income
1 Take cash from your Member Account when it suits you. You can choose to increase or decrease
You may want to take your Member Account as a lump the amount of income you take to match your needs. You
sum and not take any income but you should understand can also take one-off taxable payments from your
the different options available and the potential tax retirement savings.
consequences. You also need to think about how you’re
going to provide an income throughout your retirement. Alternatively, you can take your tax free cash and, if you
choose, then take a regular income and/or one-off payments
You may be able to take all or part of your retirement which are taxed as income. Usually 25% of your retirement
savings in one or a few lump sums. Of this, 25% will be tax savings can be paid as a tax-free lump sum. The bigger
free, with the rest taxed as income. the lump sum you take, the less you’ll have left to provide
2 Use your Member Account to buy a pension an income.
(known as an Annuity) As part of this decision you should consider whether this
If your Member Account is large enough, the Trustees’ income will last throughout your retirement – remember
appointed annuity bureau can help you to buy an Annuity. investments and withdrawals will reduce your retirement
This will pay you a pension for the rest of your life. You can savings. With this option your savings remain invested
still take some of your Member Account as tax-free cash and any fall in value could affect how much income you
if you want. can afford to take and how long you can take it for.
If buying an Annuity is the right choice for you, you can get It’s important you regularly review your retirement
quotes from the annuity bureau on how much pension your savings if you take a flexible income.
Member Account will buy. In the same way as you would
shop around to buy car insurance, the annuity bureau will Transfer your Member Account
look across the insurance market for the best value Annuity Alternatively, you might choose to transfer the money in
for you. Your employer currently pays for this service, so your Member Account to another pension scheme.
there is no cost to you.
17Benefits on death
What happens if I die? • a lump sum equal to the value of your Member Are the benefits subject to tax?
Account, if you have one. (You will not have a Member
The benefits payable depend on your circumstances: Account if you have not paid contributions, if your The life assurance and dependant’s lump sum benefits
contributions were refunded or if your Member paid on death are normally paid tax free. The value of the
What if I die while contributing, or before I Member Account paid on death is also normally paid
have completed 12 months’ service? Account has been transferred out of the Plan).
tax free.
• a life assurance benefit of four times* your Annual • If you used your Member Account to buy an Annuity,
the death benefits paid will depend on the Annuity you If you are over age 75 when you die any benefit paid to
Pensionable Pay at your death (less any other death- your survivors may be paid to a dependant as a regular
in-service lump sum payments from other Royal Mail chose. (Please see previous page).
income, or as a lump sum which will be taxable.
Group pension arrangements) is paid; What if I die after leaving Royal Mail Group?
Who do the Trustees pay the money to?
• if you are survived by a Dependant, an additional lump Your benefits depend on what has happened to your
sum of two times* your Annual Pensionable Pay will Member Account. The Trustees decide who to pay benefits to on your death
be payable; and – this usually means payments of lump sums are paid free
• a lump sum equal to the value of your Member from inheritance tax. However, the Trustees will take
• a lump sum equal to the value of your Member Account, if you have one, is paid from the Plan. (You your wishes into account. You can let them know who you
Account, if you have one. will not have a Member Account if you have not paid would like to receive the benefits by filling in an Expression
*Life assurance benefits are only payable up to the contributions, if your contributions were refunded or if of Wish Form. This form is available on the website or by
amount of the insurance cover held by the Trustees and your Member Account has been transferred out of the calling the Zurich Royal Mail Service team. If your
to the extent that the insurance provides funds to the Plan). If your Member Account has been transferred circumstances change (for example you marry or divorce)
Trustees. In certain circumstances this could mean that to another arrangement, the death benefits paid will you should make sure that you complete a new form.
death benefits have to be reduced. depend on the terms of that arrangement.
What if I die after opting out of the Plan or • If your Member Account has been used to purchase
an Annuity, the death benefits paid will depend on the
stopping my contributions but still work for Annuity you chose. (Please see previous page).
Royal Mail Group?
Separate dependants’ pensions are not provided under
• if you are under age 75, a life assurance benefit of two the Plan although the lump sum life assurance benefit
times* your Annual Pensionable Pay (less any other could be used to buy a dependant’s pension, if required.
death-in-service lump sum payments from other
pension arrangements of Royal Mail Group) may be
paid from a separate life assurance arrangement, and
18How do I…
Keep track of my Member Account? Make other changes? Get in touch?
You receive a benefit statement each year from the Plan. You can use a form to tell the Zurich Royal Mail Service If you have a question about your benefits or want to tell
This shows the value of your Member Account and a Team about other changes you would like to make. The us about changes to your Member Account, you can get
projection of the pension that your Member Account following forms are available on the website: in touch with Zurich at:
might provide at your Selected Retirement Age.
• Changes form – used to change the Selected Zurich Royal Mail Service Team
View and make changes to my Member Retirement Age and/or investment choice PO Box 1073
Account? Cheltenham
• Choices form – complete this if you wish to opt-in
Gloucestershire
before you are enrolled automatically, or change your
GL50 9NN
contributions
Email: royalmailserviceteam@uk.zurich.com
• Expression of Wish form – used to tell the Trustees
who you would like to receive any death benefits. Phone:0800 092 8263
Get more information about the Plan? Lines are open Monday to Friday 8.00am – 5.30pm
(except public holidays).
The Trustees’ annual report and accounts is available
from the Zurich Royal Mail Service Team or the website. An answer phone operates outside these hours. Any
The Trustees’ annual report and accounts for the messages are dealt with on the next working day. Calls may
Plan year to 31 March are normally available from the be recorded or monitored for training and quality purposes.
following October. Make a complaint?
Tell my employer about changes to my If you have a problem with your pension, you should first
personal information? speak to the Zurich Royal Mail Service Team.
Once you are a member of the Plan you will receive a If you are still employed by Royal Mail Group, please tell The law requires the Plan to have a formal Internal
password and user number. This gives you access to the your HR department if your address or personal Dispute Resolution Procedure to help solve disputes. This
website and enables you to view and make changes to circumstances (e.g. marital status) change. If you are no procedure should be used before going to the Pensions
your Member Account. The guide to getting on-line longer employed by Royal Mail Group, please contact the Ombudsman. You can obtain full details of the Internal
explains how this works. The website also has more Zurich Royal Mail Service Team. Dispute Resolution Procedure from the Zurich Royal Mail
information on the investment choices offered under the Service Team or the Plan Secretary.
Plan, including a detailed Investment Guide and Fund The Plan Secretary can be contacted at:
Information Sheets. You don’t need a password to see these.
Royal Mail Defined Contribution Plan
Don’t worry if you do not have access to the internet, the Second Floor
Zurich Royal Mail Service Team will provide you with help 11 Ironmonger Lane
on the telephone or by email. Please see the ‘What do I London
need to do?’ section for details of how to get in touch. EC2V 8EY
19Get financial advice?
If you’re unsure about joining the Plan or making an
investment decision, you should take financial advice.
For details on how to find a financial adviser near you, go
to unbiased.co.uk or vouchedfor.co.uk. You will usually
have to pay for any financial advice you receive. However,
Royal Mail will pay for financial advice to help you decide
how to use your Member Account when you decide to
take your benefits. You are able to take your retirement
benefits after age 55. The Zurich Royal Mail Service Team
will be able to inform you of the choices available to you.
20Glossary
The terms that appear in bold throughout this booklet are Annuity – this is the regular retirement income that will If you are contracted to work less than full time it means:
defined below: be paid by an insurance company in return for a sum of • your basic salary or wage for your contractual hours,
Administrator – this is a reference to Zurich Corporate money paid from the proceeds of your Member Account plus
Savings (Zurich), the company appointed by the Trustees at retirement. The level of the Annuity will depend upon
the age at which you retire, your health, the size of the • the salary or wage that you earn for non-contractual
to carry out the day-to-day administration and record hours worked each pay period (which is a week if you
keeping for the Plan. Zurich are also responsible for lump sum being invested and even where you live. There
are different types of Annuity (and associated options) are a weekly-paid employee and a month if you are a
running the Plan’s website. Their dedicated helpline monthly-paid employee). Earnings for hours of work
number is 0800 092 8263, or you can email them at available which will also affect the size of your income, as
will the level of market interest rates when the Annuity is that are in excess of the number of hours normally
royalmailserviceteam@uk.zurich.com. scheduled for someone working full time in your role
bought.
Annual Allowance – an annual limit on the amount that will not be counted for the purpose of Pensionable
can be paid by yourself (and your employer) to all the Beneficiaries – any person or persons other than a Pay. Bonuses and other items will not be counted for
pension arrangements you may have. The Annual Member who are entitled or potentially entitled to a the purpose of Pensionable Pay.
Allowance is currently £40,000. benefit under the Plan.
Plan – refers to the Royal Mail Defined Contribution Plan.
If total contributions amount to more than the Annual Dependant – broadly someone who, in the opinion of the
Trustees, was financially dependent on you at the date of Selected Retirement Age – the age you tell the Trustees
Allowance you may have to pay tax on the excess. you intend to take your benefits. If you do not choose a
your death or someone with whom you were in a
To work out the Plan contributions that count towards your relationship of mutual financial dependency. Selected Retirement Age, the Trustees will assume you
Annual Allowance, you need to determine the total of all intend to take your benefits at Normal Retirement Age.
the employer and employee contributions that have been Lifetime Allowance – the total value of the pension
benefits that you can take from all your pension State Pension Age – the age at which State pension is
paid into your Member Account in a ‘pension input period’. payable. The State Pension Age is currently 65 for both
arrangements over your lifetime, before you have to pay
If you are a high earner the amount of the Annual a tax charge. The standard Lifetime Allowance is women and men. The State Pension Age for both men
Allowance is reduced and the amount it is reduced by currently just over £1 million. and women will then start to increase to reach age 66 by
depends on the level of your income, referred to as 6 October 2020. The government has also announced
Member Account – this is made up of the contributions that the State Pension Age will increase to age 67
‘tapered annual allowance’. For more information visit
paid into the Plan by you and your employer and the between 6 April 2026 and 6 April 2028. If you want to find
the ‘Tax on your private pension contributions’ pages at
investment returns they receive. out more about your State Pension, visit the ‘Working,
gov.uk.
Normal Retirement Age – is 65. jobs and pensions’ area at gov.uk.
The Plan’s ‘pension input period’ is currently the period
from 6 April to 5 April. Pensionable Pay – means your basic salary or wage Trustees – the Trustees are responsible for the overall
(excluding overtime, bonuses or any other items) if you running of the Plan and it is their duty to act in the best
Annual Pensionable Pay – this is the greater of:
are employed on a full time contract. interests of all the Members and Beneficiaries.
• Your Pensionable Pay in your last full month or week
of work multiplied by 12 or 52 depending on whether
you are monthly or weekly paid; and
• Your total Pensionable Pay for the last year. 12 or 52
complete pay periods will be used for this calculation
depending on whether you are monthly or weekly paid.
21State Pensions Help from external organisations
The State Pension is a regular payment from the The Pensions Advisory Service (TPAS) is available at any You can contact the Financial Ombudsman Service by:
government that you can claim when you reach time to help you or your beneficiaries (or potential
Letter: The Financial Ombudsman Service
State Pension Age. beneficiaries) in connection with any query that you or
Exchange Tower
they may have about your pension. TPAS’s services are
The way it works changed from 6 April 2016. To qualify London
free of charge. You can contact TPAS by:
for any State Pension, you’ll need to have at least ten E14 9SR
years of national insurance contributions. You’ll need 35 Letter: The Pensions Advisory Service Phone: 0800 023 4567 or 0300 123 9123
years of national insurance contributions to receive the 11 Belgrave Road Website: financial-ombudsman.org.uk
maximum amount, currently £168.60 a week. Some London
people might receive more than this if they would have SW1V 1RB The Pensions Regulator regulates occupational pension
been entitled to a higher income under the old rules. schemes in the UK. Its priorities include protection of the
Phone: 0800 011 3797
benefits of members of work-based pension schemes and
Website: pensionsadvisoryservice.org.uk
the promotion of good administration of work-based
The Pensions Ombudsman is appointed under section pension schemes. The Pensions Regulator is able to
145(2) of the Pension Schemes Act 1993 and may intervene in the running of a scheme where the trustees,
investigate and determine any complaint or dispute of fact employers or their professional advisers have failed in
or law in relation to an occupational pension scheme made their duties.
or referred in accordance with that Act. You or your
The Plan is registered with The Pensions Regulator.
beneficiaries (or potential beneficiaries) can contact the
You can contact The Pensions Regulator by:
Pensions Ombudsman by:
Letter: The Pensions Regulator
Letter: The Pensions Ombudsman
Napier House
10 South Colonnade
Trafalgar Place
Canary Wharf Brighton
E14 4PU BN1 4DW
Phone: 0800 917 4487 Phone: 0345 600 7060
Website: pensions-ombudsman.org.uk Website: thepensionsregulator.gov.uk
Although the Pensions Ombudsman deals with most
complaints and disputes with regard to occupational
pension schemes, there are some circumstances in which
you may wish to contact the Financial Ombudsman
Service. The Financial Ombudsman Service deals with
complaints about firms which are regulated by the
Financial Conduct Authority. Broadly, where you have a
complaint concerning Zurich (or any other organisation
regulated by the Financial Conduct Authority) then you
may wish to contact the Financial Ombudsman Service.
22Disclaimer Data Protection
This booklet only provides a summary of the benefits provided The Trustees have chosen Zurich Assurance You can find details of our selected third parties
under the Plan. The Trust Deed and Rules are the formal Ltd (Zurich, also we, our or us) as its pension with whom we may share your personal
documents that govern the Plan. If the provisions of this scheme provider. information in the leaflet ‘Your privacy is
booklet conflict with the Trust Deed and Rules, the provisions important to us’.
This section tells you how Zurich Assurance Ltd
of the Trust Deed and Rules will prevail. A copy of the Trust
(part of the Zurich Insurance Group) will deal with We may also process your personal information by
Deed and Rules can be obtained from the Trustees.
your personal information. Where Zurich means of automated decision making and profiling
The Trust Deed and Rules may be amended from time to introduces you to a company outside the group, for the purposes of targeted marketing, where
time. Royal Mail Group has the right to discontinue the Plan that company will tell you how they will use your appropriate, or where we have consent to do so.
at any time. personal information. Zurich Assurance Ltd will You can ask for further information about our use
This booklet is based on current legislation and tax regulations. only act after receiving instructions from the of your personal information or complain about its
Legislation and regulations may change from time to time. Trustees to enrol you into or join the Plan. use, by contacting our Data Protection Officer in
We and our selected third parties will only collect the first instance at: Zurich Insurance Group, Tri-
and use your personal information (i) where the centre 1, Newbridge Square, Swindon, SN1 1HN
processing is necessary in connection with or by emailing the Data Protection Officer at
providing you with a quotation and/or contract of gbz.general.data.protection@uk.zurich.com.
insurance; (ii) to meet our legal or regulatory If you remain concerned about our processing of
obligations; or (iii) for our `legitimate interests’. It is your personal information, or are not satisfied with
in our legitimate interests to collect your personal our handling of any request by you in relation to
information as it provides us with the information your rights, you also have the right to make a
that we need to provide our services to you more complaint to the Information Commissioner’s
effectively including providing you with information Office. Their address is: First Contact Team,
about our products and our services. We will Information Commissioner’s Office, Wycliffe
always ensure that we keep the amount of House, Water Lane, Wilmslow, SK9 5AF.
information collected and the extent of any
processing to the absolute minimum to meet this Full details of how we use your personal
legitimate interest. Full details of the way we will information can be found in the leaflet ‘Your
use your personal information and details about privacy is important to us’.
your rights as a data subject can be found in the The Trustees’ privacy statement is also available
leaflet ‘Your privacy is important to us’. We will to view or download on rmdcp.uk.
contact you to obtain consent prior to processing
your personal information for any other purpose.
23You can also read
