If this is the way that Royal Mail allows the message to seep out to its 110,000 members, then “doh”! I hope that it is mad at the FT – as I am.
The first six months of its CDC plan (October to March) happened to be poor markets. At the end of March 2025 markets were in haywire due to the trump tariffs.
Look at the principal world market from October 2024 to March 2025(left)
And look at what happened the other side of March and you see how markets work (right). To say this is how CDC works is wrong. We all know that and it’s neither good journalism (FT) or good message management (Royal Mail) to have this headline
It is ludicrous to make a story out of a year’s return but if you want it, here is the bump that happened from October to March and here’s what’ happened since – worse will happen and the collective pensions plan is stress-tested for much worse!
Bad first half of the year, good second half; first half picking up all the setting up expenses of getting going, second half will have been free of some of these.
The Royal Mail Collective Pension Plan, a collective defined contribution (CDC) scheme launched in October last year after six years of planning, dropped 4.6 per cent by the end of March, compared to a 3.6 per cent decline in its benchmark index, according to its results seen by the Financial Times.
….people familiar with Royal Mail’s CDC, which has 110,000 members, stressed that it was too early to draw conclusions about payouts in the long term. The fund was just getting started, and flows and timing had an outsized impact on returns, they added.
I agree with this comment with regards transparency
and this needs to be explained to regulators and to members in a way that makes sense. We do not want to have reporting that makes a benchmark into the pole vault.
The ups and downs of the scheme against the asset and liability expectations are based on accrual and pensions in payment estimated in decades not months. There will be great things and awful things happening within a workforce and future pensioners, We can expect the numbers with the Collective Plan to stretch over 80 years with 20 year olds and centenarians building and getting benefits from the same fund.
We are escaping the fate that pensions were creating for Royal Mail. A DC scheme insured by Scottish Widows having been bought out by Zurich. This DC scheme was offering post men and women no security from the markets as the collective scheme does. Instead it was offering drawdown or annuity, neither of which made sense to people who had been promised pension. There was a DB, indeed more than one DB plan, standing behind the postmen but they were not accruing nor could they, and Royal Mail stay solvent.
What happened, thanks to the good sense of Royal Mail management and the progressive thinking of their unions (principally the CWU) was the CDC scheme. It is a CDC scheme unique to Royal Mail, Royal Mail with 110,000 active workers is unique to Britain. We should be very proud that it has an opt out of only 700 staff despite being contributory.
John Ralfe is right that postal workers in the Royal Male Collective Plan need to be sure of what they are going to get and how it is calculated. I have been on the site and I am confident that postal workers do get it and that John would get it too.
The FT is being really irresponsible in reporting the progress of the scheme in this way. I would like any reader who is uncomfortable with what Royal Mail is doing to spend some time on the member website.
