Joining the Collective Plan is easy
Most employees will join automatically on 7th October 2024 they’ve been employed with Royal Mail (including Parcelforce) for a full year.
Select which best applies to youHere’s how it all works for your income for life and lump sum
In five stepsWe understand that circumstances change, and so do priorities.
Select which best applies to you
From 7 October 2024, most employees who have been working for Royal Mail continuously for a full year will join the Collective Plan.
But there are some exceptions, which are detailed in the Collective Plan's Handbook. If you’re not sure about whether you will join automatically, please contact Royal Mail’s HR Services or contact the Pensions Service Centre.
When you join the Collective Plan, you will stop paying into any other Royal Mail pension scheme. Any contributions you have made into other Royal Mail pension schemes will remain in that pension scheme. They will not be transferred into the Collective Plan.
You will not join the Collective Plan until you have 12 months’ continuous employment. For most employees, they will join the Collective Plan automatically once they have been working for Royal Mail (for a full year). This will happen without you doing anything. But there are some exceptions, which are detailed in the Collective Plan’s Handbook.
When you join the Collective Plan, you will stop paying into any other Royal Mail pension scheme. Any contributions you have made into other Royal Mail pension schemes will remain in that pension scheme. They will not be transferred into the Collective Plan.
Most employees who don’t work for Royal Mail (including Parcelforce) are not eligible to join the Collective Plan. But there are some exceptions, which are detailed in the Collective Plan’s Handbook.
If you decide to leave the Collective Plan
Your options will be different depending on how long you’ve been in the Collective Plan, and when you started working at Royal Mail.
It’s important to understand that if you’re working for Royal Mail and are thinking about leaving the Collective Plan (once you’ve joined) you will only be able to leave and then re-join the Collective Plan once.
Page last updated 1 May 2024
For most people, once you’ve been working for Royal Mail for a year, you’ll automatically join the Collective Plan.
You pay in 6% of your pensionable pay and Royal Mail pays in 13.3% of your pensionable pay (plus, Royal Mail will pay a further 0.3% of your pensionable pay towards your ill health premiums). See the the Collective Plan’s Handbook for a full breakdown of yours and Royal Mail’s payments.
You can also choose to boost your lump sum by paying in an extra 1% (and Royal Mail will also pay in an extra 1%).
The money you and Royal Mail pay in is pooled in the two main sections of the Collective Plan, along with everyone else’s money. It’s then all invested together within each section.
When the time comes to retire you’ll get two things:
Things to know
Your pensionable pay is your basic pay, plus other payments such as allowances and bonuses that may count towards your pension, depending on the terms of your employment. If you have ever been a member of a different Royal Mail pension scheme you should be aware that the definitions of pensionable pay are different in the different schemes.
If you work part-time, overtime will also count as part of your pensionable pay, up to the point that your hours reach the same as they would be for someone in a full-time contract for your role (provided that those hours are paid at the same rate as basic pay).
The Collective Plan is designed to give you an income for the rest of your life from age 67. You build up 1/80th of all your pensionable pay earned each year while paying into the Collective Plan and the aim is to increase it to help keep up with the cost of living. However, this is not guaranteed.
What does that mean for me?
So, using an example, if your pensionable pay was £26,000 over a year, in that year you’d initially build-up £325 as a yearly income, based on you getting it at age 67.
£26,000 ÷ 80 = £325
Over time, if you continue paying into the Collective Plan, your income for life will build up to provide your total income for life in retirement.
What about the cost of living?
This part’s important. The cost of living is rising, and it’s fair to assume that £325 today isn’t going to buy as much when you come to retire (which could be in many years’ time).
Each year your income for life will change, when you’re building it up and after you’ve started to get it in retirement. Everyone’s income for life is adjusted each year by the same percentage, even after you’ve retired, so that the cost of everyone’s incomes stays in balance with the value of the Collective Plan’s assets. This means your income for life could go down, or go up, or stay the same each year - to balance the cost of everyone’s incomes with the value of the Collective Plan’s assets.
The aim is to have more ups than downs and so that your income for life will keep up with the cost of living over time. However, this is not guaranteed – you could end up with more or less than the £325 shown in the example as a yearly income when you reach age 67.
The Collective Plan is designed for you to get your lump sum at age 67, and builds up year by year, separately from your income for life. It’s paid as a one-off amount at the same time you get your income for life.
Your lump sum also builds up at a proportion of your pensionable pay - at a rate of 3/80ths of any pensionable pay earned while paying into the Collective Plan. But, unlike your income for life, the lump sum you build up won’t go down – it’s guaranteed.
But if the Collective Plan performs well, for example if the lump sum investments do well, it could go up, along with everyone else’s lump sums. Any increases will be guaranteed and cannot be taken away in the future. If you haven’t transferred out your income for life and aren’t subject to any tax restrictions, you might be able to get all your lump sum tax-free. See the Collective Plan’s Handbook for more information.
Page last updated 1 May 2024
The money you and Royal Mail pay into the Collective Plan doesn’t disappear if you leave or have to stop paying in.
If you decide to leave the Plan, your options will be different depending on how long you’ve been in the Plan, and when you started working at Royal Mail.
It’s important to understand that if you’re working for Royal Mail and are thinking about leaving the Plan you will only be able to leave and then re-join the Collective Plan once.
If you’ve already left the Collective Plan once before (and had built-up a guaranteed cash sum and income for life in the Plan at that time) and then re-joined – you won’t be able to re-join a second time.
If you would like more information about your options on leaving the Plan, please contact Royal Mail’s HR team.
You’ll become a ‘deferred’ member of the Plan. You can’t have a refund of your payments, or Royal Mail’s, but you can:
leave your income for life and cash sum in the Plan until you decide to get them or transfer out
if you’re over 55 (or 57 from 2028), you can get your income for life and cash sum
ortransfer your value out – either as a whole amount, or you could transfer your income for life or the cash sum out separately. Any booster or extra AVC payments would need to be transferred out with the cash sum.
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