DHL Pension Arrangements
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Circular No. NP121/07
19th September 2007
DHL Pension Arrangements
Members will have received letters from Management regarding changes to pension arrangementsoffered by the company from the following three funds:
- Exel Retirement Plan
- Ocean Nestor Pension Scheme - Nestor Section
- Tibbett & Britten Pension Scheme
I have been advised that in total there are twelve different letters covering the three separate pension schemes affected. This is because within each scheme there are also different sub sections which require specific reference in the relevant letter. A copy of the main letters which cover the majority of scheme members has been forwarded to me for consideration.
Unfortunately, the length of the letters and the level of detail included make it somewhat difficult for the lay member to understand. However, this is necessary to allow those individuals who have options to exercise regarding Age Discrimination and legal compliance, to see all the information they will require to make an informed decision. Further support is available from the company to help individuals understand what is a complex subject.
For Exel Retirement Plan members, the one advantage of the changes is that members of the First Tier (money purchase section) will be given an opportunity to participate in the Second Tier final salary arrangement regardless of whether or not they have reached age 40. This will allow the accrual of final salary benefits at an earlier age.
Unfortunately, however, the company is also proposing the following drastic changes from 1 January 2008 which not only increases the cost to members but at the same time reduces the value of future benefits:
- Contributions for all members of the Second Tier Section will be increased to by 1% to 8.5%.
- Final pensionable pay will be averaged over the last 3 years before retirement, instead of the final year.
- Future service pensions paid below age 65 will be reduced for early payment.
- Pensions built up from 1 January 2008 will be increased by the increase in the Retail Prices Index up to a maximum of 2.5%, compared to previous service pensions being increased up to maximum of 5%.
Whilst the offering those under age 40 an opportunity to obtain final salary benefits is a welcome development, it is totally unacceptable to increase pension costs when reducing the value of those benefits. In the circumstances, RMT is seeking a meeting with the Company to discuss this unsatisfactory situation.
However, Exel Retirement Plan First Tier members wishing to opt into the Second Tier should not await the outcome of our discussions with management before opting, as in order to accrue final salary benefits from 1st October, options have to be with management by 31st October. No further options to join will be permitted. Regrettably, RMT is unable to provide advice on whether this option should be exercised, although I would comment that the majority of final salary schemes are now closed to new entrants and employees no longer have an opportunity of accruing benefits related to their salary. Anyone opting into the Second Tier would be able to opt out or move to the Voyager Scheme at any time in the future.
I shall keep you advised of developments.