PENSIONS ADAM WHAT HAS CHANGED? On the 8th February, 2007, through their brief given to all employees and the media, Royal Mail stated: “Consultations will take place on ways to safeguard an affordable final salary scheme for all existing employees” Adam Crozier, Royal Mail Chief Executive, said “It’s important we safeguard the future of the pension fund for our people who regard a Final Salary Pension Scheme as a key benefit of working for Royal Mail”.
Dear Colleague, You will be aware that Royal Mail has started the 60 day pension’s consultation process which closes on 16th January, 2008. Be in no doubt whatsoever what Royal Mail decides to do at the end of this consultation it will have a dramatic and lasting effect on your Terms and Conditions. Remember, the proposals affect all parts of Royal Mail Group including POL, Parcelforce, Romec and Quadrant. The following document seeks to be both responsible and constructive in explaining why we are so opposed to Royal Mail’s plans for our pensions. In addition, we have also explained what type of CARE scheme we should opt for if we do not convince the Government to force Royal Mail to keep the final salary scheme open. The report is divided into the following sections:
2.What are Royal Mail’s plans? 3.What is the CWU position with regards to the pension consultation? 4. What is a CARE scheme? 5. What Pensions Schemes are our members in? 6. What is London’s preferred option? 7. What is plan B? 8. Recommendations. Why does Royal Mail need to change the pension scheme? Royal Mail has argued that the final salary pensions scheme leaves them at the mercy of increased mortality rates and the performance of investments. They point out that currently they have to pay £260 million per year to pay off the deficit to the pension scheme which equates to 10% of pensionable pay. This is in addition to their normal pension contributions of 20% of pensionable pay, which is £580 million per year going forward. Royal Mail point out that they have never made that much in profit even under the EFL scheme of the late 1980’s and 1990’s. Moreover, they claim that it would be commercial suicide if they continue to pay that amount going forward when they are now subject to full competition. For their part, the pension trustees’ role is that they want the scheme to be safe and as risk free as possible. Royal Mail has commenced the consultation process with a number of proposals which they would want to introduce as changes to the pension scheme from April 2008. It is important that all members are aware that Royal Mail does not need agreement with the CWU to make changes to the pension scheme. They only need the agreement of the pension trustees. Nevertheless, it is essential that we use this pension’s consultation process as a launch pad to unite the opposition to Royal Mail’s plans for our pensions. What are Royal Mail’s proposals for our pension scheme? In essence, Royal Mail’s proposals are: An increase in the normal retirement age from 60 to 65 with effect from 1st April, 2010. Changing from a final salary scheme to a CARE scheme from 1st April, 2008. Closing the existing scheme to new members from the end of January 2008.
As a result of discussions with the CWU they are also committed to the following: That pensionable service before 1st April 2008 will continue to be calculated based on the final salary scheme. That a CARE scheme would be in place from 1st April 2010 with future service being subject to an annual indexation tied to RPI and capped at 5%. That normal retirement age would increase to 65 with effect from 1st April 2010. AVC arrangements would be available for those who wish to increase their contributions to mitigate the effect of the changes. That a high quality defined contribution scheme will be put in place for new joiners after 31st January 2008. There will be a one year waiting period for employees eligible to join the scheme.
What is the National CWU position with regard to Royal Mail’s plans? Contrary to what has been speculated the CWU have not agreed these pension changes. In fact, the joint statement only refers to the CWU agreeing to the consultation process and not the outcome of it. The CWU Nationally have said it would be inconceivable and unacceptable that further negotiations would not take place once the pension consultation process closes on the 16th January. It is also fair to say that the CWU is supporting pension change as it recognises that in the commercial environment Royal Mail now operates it has to be able to invest money to be able to beat the competition as well as investing in members’ terms and conditions. Having to pay an extra £260 million per year for the next 17 years to plug the deficit is going to cripple Royal Mail financially. We know that some have criticised the CWU for supporting pension reform but the pension scheme can be reformed and made safer without agreeing to Royal Mail’s pension proposals. What is a CARE scheme? A CARE scheme is an averages revalued earnings scheme. Royal Mail wants to replace the final salary scheme with a CARE scheme. Below is a background to what a CARE scheme is. In 1987, less than 1% of the UK occupational schemes were in a CARE scheme and this remained the case until 2000. Since 2000, however, companies like British Airways, the BBC, Sainsbury, Tesco, ITV and the Nationwide Building Society have closed their final salary schemes to new entrants and replaced them with CARE. Unlike what Royal Mail is proposing, these companies did not close their final salary scheme to current members of the scheme. Just as significant is that these companies introduced a CARE scheme for new entrants, whereas Royal Mail wants to introduce a defined contribution scheme. How does a CARE scheme work? The CARE scheme will work by Royal Mail calculating your pensionable earnings each year which increase by the rate of inflation (to a maximum of 5% for each year). Therefore, in essence you build up a slice of your pension each year. So what is better – a final salary scheme or a CARE scheme? Without a doubt the final salary scheme is better than a CARE scheme. Indeed, a distinguished pension expert, Des Hamilton of the Pensions Advisory Service, is quoted as saying “whatever claims companies and their advisors make for CARE schemes, they will only cost less to the employer if they provide lower pensions to employees.” Given the fact that Royal Mail is only proposing pension changes to save money, then clearly a CARE scheme will see the vast majority of CWU members worse off than with a final salary scheme. That is not to say a CARE scheme does not have some merits and would be the best alternative if the final salary scheme closed. However, what Royal Mail is proposing for a CARE scheme is clearly inferior to other companies’ CARE scheme arrangements. What pension schemes are our members in? The vast majority of our working members (130,000 employees) are in the Section C POPS scheme which is a sixtieth’s scheme paying out on final salary minus the lower earnings deduction of £3,328. The remainder of our working members are in Section A or B, the POSSS Scheme, which is an eightieths scheme paying out on final salary and three times annual pension as a lump sum. What is London’s preferred option? Our preferred option is easy to write but much harder to win and that is to maintain the final salary even if some of the other issues, including the retirement age, were amended. Remember, by agreeing to the retirement age being 65 but maintaining the right to go at 60, reduces Royal Mail’s contribution rates by 4.5%. The effect of this move would still enable an individual who is currently in their early 40s to go at 62/63 and receive the same benefits. The above, not withstanding safeguarding the final salary scheme, is a political issue and not just an issue with Royal Mail. The only way we can safeguard the final salary scheme is if we were to successfully lobby the Government. This would mean we would have to force our National leadership to run a political campaign the like of which we have lacked for some years, to force the Government to allow a different use of the escrow money and perhaps the use of the assets held by Royal Mail Property Holdings to cut the deficit. Even if we did launch such a campaign there is no certainty that John Hutton, Secretary of State at the Department for Business, Enterprise and Regulatory Reform, given his evidence to the Select Committee, would concede on this issue. What is plan B? Quite simply, plan B would be to make the CARE scheme as good a scheme as possible in the event that we could not force the employer to maintain the final salary scheme. The following is a list of improvements which could make the proposed Royal Mail CARE scheme significantly better That the calculation of pensions should not be based on inflation or capped at 5% but should be indexed to Royal Mail pay average increases or National average earnings. All pay should be pensionable, including allowances and lump sum payments, as is the case in most other CARE schemes. The lower earning deduction should be ceased as the employer will be taking on less risk. The CARE scheme should be a sixtieth scheme with the opportunity to take a lump sum of 25% of your pension pot. The new recruits should enter into the new CARE scheme and not a defined contribution scheme so there is not a two tier workforce. Other issues which need to be tackled under a CARE scheme. The entry age is currently 18-55 but should be 18-60. Would 6 2/3 enhanced service still be paid for redundancy purposes? Tax free lump sum options under the Pensions Act 2004. Part timers to capture full pensionable pay. Pensionable sick pay issues. Terminal illness rules need to be updated. Could Smart be used to reduce costs? (Saving on National Insurance payments for both employee and employer) Conclusions All London Branches representing over 15,000 workers have rejected Royal Mail’s plans to worsen our pension benefits. All London Branches are united in safeguarding our pension benefits. The Union are not dinosaurs and are not saying that the status quo has to be maintained on pensions. However, we cannot, as a Union, stand idly by and allow Royal Mail to be one of the only employers who have closed the final salary scheme for existing members. As your elected London Officials we intend to do everything in our power to campaign and change Royal Mail’s pension proposals which will see our members individually lose thousands of pounds. However, it may take a further ballot for strike action to achieve our aims.
There is no time to lose! It’s time to mobilise. It’s time to fight to safeguard our pensions.
A report by the London Divisional Committee |
London Regional Royal Mail Group Pensions Seminar The Regional Pensions Seminar for the London Region will be held on Monday the 3rd of December 2007 at 10.30am on the 2nd Floor 33/41 Dallington Street EC1V 0BB. To explain the situation we are in and hear our views will be Ray Ellis, Assistant Secretary. |
CWU BALLOT TIMETABLE FOR AGREEMENT
CWU can now confirm the ballot timetable for the proposed agreement with Royal Mail on pay and modernisation is as follows:
Ballot papers to be dispatched from Friday 9th November.
Ballot closes on Tuesday 27th November.
In setting out this timetable, the union has had to take into account the current backlog of mail that is still affecting some areas of the country. This is a one member one vote ballot. This ballot does not cover pensions which will be dealt with in a separate consultation and ballot.
The result of the ballot will be announced as soon as possible. |
FINAL AGREEMENTCWU AND ROYAL MAIL PAY AND MODERNISATION AGREEMENT - APRIL 2007/20091. INTRODUCTIONIn order for Royal Mail to thrive as a business and to ensure that it remains able to compete effectively it is recognised that change is going to have to happen at a scale and at a pace never experienced before. Both Royal Mail and CWU are jointly committed to working together to deliver that change by agreement, continuing to protect jobs (in line with our commitments in MTSF) and provide high quality terms and conditions for all employees. Both parties recognise that a fresh start is needed and are committed to moving away from the adversarial relationships that persist in too many parts of the business. This needs to be replaced by respect for different viewpoints and a determination to work together to find common sense solutions that are mutually beneficial. This agreement lays the basis for changing how we work to ensure a successful future for the business, its employees and how the business and CWU will work together. 2. SCOPE OF THE AGREEMENTThe agreement covers the following grades:
The agreement is in four sections, the first outlining the elements relating to employee pay, benefits and job security; secondly outlining the phased approach to delivering change and flexibility, thirdly the efficiency agreement, fourthly the Network 2007 Deployment Agreement. 3. SECTION 1: EMPLOYEE PAY AND BENEFITS1.1 A non-consolidated lump sum of £175 per FT employee pro-rata for PT employees (covering the April to September period). This is funded by the ESOS pot. (Area based and Network drivers will not be eligible for the lump sum.)
1.3 Early shift allowances in delivery retained as grandfather rights (for those in receipt since April 2007), including those in receipt of equivalent MTSF payments for changes made since May 2005. We will agree how this money, and equivalent MTSF payments for early shifts, may be used going forward as part of the pay restructuring process in Joint Working Group 2 – if no satisfactory solution is found then grandfather rights will be retained. The early shift payment is ceased in delivery on agreement to pay restructuring.
1.5 April 2008: A 1.5% increase for all grades on basic pay (including London pay ranges), weekday overtime and Scottish Distant Islands Allowance only. This payment will be made locally when the flexibility defined as phase 3 in section two of this agreement has been implemented.
4. SECTION 2 – DELIVERING CHANGE AND FLEXIBILITY
Change is to be shaped and implemented in four phases. Phase 1 – Immediate Operational ChangesStart times and Network 2007
Network 2007 will be implemented on 22 October in line with the deployment framework set out in section 6. Nightshifts in delivery unitsIncreasing levels of automation has created an opportunity to make better use of indoor time in delivery. The majority of night shifts will cease by March 2008. This will be undertaken in line with normal IR procedures. Exceptions are likely to be required by City Centre units and those with a high proportion of firms deliveries. Account will, of course, be taken of individuals’ circumstances and health, safety and security issues. Weekend workingWeekend and bank holiday work in mail centres will be focussed on time critical products (1C and Express Products). The CWU note that ROYAL MAIL will cease Sunday collections from 21st October. The impact on employees of this change will be the subject of urgent local consultation. Phase 2 - Enabling local flexibilityIn order to become a competitive and responsive business, while upholding high standards of employment, Royal Mail needs to be able to use its resources effectively, efficiently and to adapt at pace. All offices will jointly draw up an agreed plan to be implemented by the end of January 2008 to enable local flexibility. ObjectivesThe plan will meet the following agreed objectives:
The two key strands in this modernisation package are:
Enablers It is all about managers, reps and employees working together sensibly with a bit of give and take, applying equally to all. This is not about employees not knowing what job they are on, or when they start and finish from one day to the next. Nor is it about anyone refusing reasonable requests. Account should of course always be taken of individual circumstances.
Phase 3 – Transforming the way we workBoth parties are committed to introducing new ways of working throughout the business by April 2008. In order to achieve this there will be a trial in four offices per AGM area covering the following:New arrangements to cover for one another and develop sensible options to absorb absences, and increased workload, where time exists within normal hoursTo ensure all paid work hours are utilisedTo creates a working environment where employees, CWU reps and managers feel valued and motivated.This flexibility could also facilitate arrangements for employees to make their own arrangements to cover and swap duties (subject to approval from their manager) – within contracted hours, providing quality of service is not adversely affected and there are no additional costs to the business.Local ideas will be generated, agreed and deployed through trials by early January 2008. The trials will be nationally evaluated to identify the widest range of options for national roll out.Local offices will be entitled to the 1.5% pay increase from 7 April 2008 subject to deployment of these new arrangements. Any offices where deployment is deferred will receive the additional 1.5% from the date of deployment5. PHASE 4To assist development of a fourth Phase of Royal Mail modernisation, consultation and negotiation will now take place in the following working groups. The intention is for these joint working groups to develop national agreements, where appropriate, by no later than the end of April 2008, to be deployed as soon as possible thereafter. Joint Working Group 1 – Relationships. will consider how to improve industrial relations within Royal Mail, including arrangements for negotiation, consultation and decision-making, the management of change, personnel procedures and practices covering issues like attendance, conduct and performance management. Joint Working Group 2 – New Reward Framework will examine pay simplification possibilities (within the existing pay bill), a new pay and reward package, different pay models, reviewing on what the local element of the ColleagueShare dividend for years 2 and 3 will be based and MTSF. The Group will also consider how to implement monthly pay. It will also review annualised hours or banked hours, flexible working, and possible changes to attendance patterns that could both benefit the business and employees and is in line with the company’s family-friendly policy. The group will decide whether it needs to operate sub groups for any element of this. Joint Working Group 3 – Future working. This group will look at the business’ future mail centre / delivery / network strategies and have an opportunity to input to them.. It will develop proposals on how the business will best capture the benefits of new technology, whilst continuing to consider the implications for job security, and job design and the new delivery model. It will also look at the strategies needed to grow and develop the business in a changing, competitive environment 6 JOINT FRAMEWORK FOR THE DEPLOYMENT OF NETWORK 2007 AND MAIL ORDER RETURNSBackground With effect from the 1st of January 2008, legislation will limit all 7.5 ton vehicles to a maximum of 56 MPH. This alone will slow down connections in parts of the ‘Network’ and thus change the current ‘workplan’ in regards to it being fit for purpose. Against that backdrop and the joint commitment in the ‘RTD Agreement’, that Network and Distribution functions need to be reliable, economic, efficient, flexible, transparent and on time every time, the business has conducted a total redesign of the ‘Network’, which has at its heart a £20 million per annum investment in a new ‘Air Network’. The impact of this redesign affects the number of 7.5 tons road services required, the introduction of more double deck trailers, revised hub operations and later/heavier arrival patterns at Mail Centres and Delivery Offices etc. Because of the recent difficulties between Royal Mail and the CWU, the revised ‘Network’ proposals and implementation plans are at a very advanced state with no agreement in place. The revised ‘Air Network’ slots drive the necessity for change from the 22nd October 2007. In the interest of resolution to the national dispute and in recognition of immovable deadlines generated by air slots and legislation and a mature reflection of Royal Mail and CWU aims and objectives, the following emergency approach has been agreed. Process
Network drivers basic pay will be increased by 2.7% from 7 April 2008, flowing through to weekday additional hours. £400 of the potential Colleague Shares dividend payment will be made in April 2008 to VOCs provided we have co-operation on full deployment of the Network 2007 changes through the process above.NATIONAL JOINT STATEMENT BETWEEN ROYAL MAIL AND CWU – RESTORING GOOD INDUSTRIAL and EMPLOYEE RELATIONS Royal Mail and CWU recognise that the scale of the recent dispute has the potential to damage relationships between managers, reps and employees. Everyone wants to put the dispute behind us and we are all committed to restoring good industrial and employee relations at all levels. All of us are committed to treating everybody and each other with respect. The following process will urgently be deployed and overseen by GM’s and CWU Divisional Representatives.
Any Network 07 changes affecting processing will be dealt with in line with the National Deployment Framework and reviewed via normal IR Procedures. |
Royal Mail Industrial DisputeEarly Day Motion 2086That this house notes that the Government is the sole owner of Royal Mail and that the 2005 Labour Manifesto commits it to “a publicly owned Royal Mail fully restored to good health, providing customers with an excellent service and its employees with rewarding employment”; believes that given this stated aim, Ministers need to take a more active and interventionist role in trying to ensure a fair, just and negotiated settlement to the current dispute in the interests of all concerned including the workforce, business and residential customers of the Royal Mail; urges the Secretary of State for Business Enterprise and Regulatory Reform to use his influence to urgently obtain a settlement and also initiate an immediate review of the impact on the Royal Mail of the liberalisation of the postal services market as promised in the 2005 manifesto and consider whether alternative carriers to the Royal Mail should themselves make a direct contribution to the cost of the Universal Service Obligation. click here for latest signatories: http://edmi.parliament.uk/EDMi/EDMDetails.aspx?EDMID=33959&SESSION=885 |
Adam Crozier opposes job and finish Allan Leighton doesn't!
From: Alan Reynolds HYPERLINK "mailto:[mailto:alanreynolds@ntlworld.com]" [mailto:alanreynolds@ntlworld.com] Dear Allan, I have attached a previous question concerning 'job and finish' and your reply. All I'd really like to know is whether your answer given to me is correct or has there been a new agreement since that communication? Many thanks for your time. Alan Reynolds (Postman)
From: Alan Reynolds [mailto:alanreynolds@ntlworld.com] Alan The job and finish framework is designed to bring about mutual benefits to reasonably balanced between all duties. Residential delivery routes should be planned on the basis of an agreed It is inevitable that some delivery officers may be swifter than others in As you are aware, Royal Mail has almost completed Single Daily Delivery We are committed to these aims and with respect, believe that the approach Kind regards Allan
Dear Allan, When we signed up to SDD last year one of the attractions for the staff was finish' and the carrot was held out for them to complete earlier than |
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ROYAL MAIL LONDON WEIGHTING BALLOT 2007RESULTS Papers issued 23,330 returned 15,142 65% YES 13,070 87% NO 2021 13% |
COMMUNICATION WORKERS UNION |
attack of their clones at Paddington Mail Centre
Mount Pleasant Nursery reprieved after Union campaign
To view the Agreement between Royal Mail Management and CWU for the Delivery of Election Material click on Material.pdf |
National Ill-health Retirement Agreement click here |
