The Royal Mail Collective Plan launched today (7 October), in what has been highlighted as the start of a "new pensions era".

The new scheme, which is the UK's first collective defined contribution (CDC) scheme, is set to offer over 100,000 Royal Mail employees a cash lump sum and an income in retirement.

Initially announced in 2018, the Royal Mail Collective Plan became the UK's first CDC scheme in 2023 after passing The Pensions Regulator's (TPR) assessment process, marking a "milestone" moment for the industry.

Every employee with at least a year’s service eligible to join, with the vast majority of Royal Mail employees expected to join the Collective Plan automatically.

Under the Collective Plan, members will receive an automatic income for life, in addition to a cash lump sum, which is expected to help make it easier for people to manage their money in retirement.

Employees will pay 6 per cent of their pensionable pay into the collective pot each payday, while Royal Mail will top up that up with a contribution of 13.6 per cent.

The scheme will be run by an independent board of trustees, made up of independent professional pension trustees as well as individuals from Royal Mail, the CWU and Unite CMA.

Commenting on the launch, Royal Mail director of group pensions, Angela Gough, said: “The Collective Plan is the future of pensions at Royal Mail and we believe it is the right scheme for our people and our company.

"Today heralds an exciting development for Royal Mail and for the pensions industry. We have worked hard with our unions, the government, TPR, and the trustee of the Collective Plan to make it possible and we are delighted to have reached this point.”

Communication Workers Union (CWU) national officer, Andy Furey, also hailed the deal the start of a "new pensions era".

"We are confident the innovative benefits within the Collective Plan will provide a better outcome for our members than a traditional defined contribution scheme," he stated.

"The twin attributes of an income for life and a guaranteed lump sum at retirement are important benefits for our members.”

Adding to this, Royal Mail Collective Pension Plan chair of the trustees, Venetia Trayhurn, said: “With over 100,000 members at launch, the Collective Plan will immediately become one of the biggest single-employer, private-sector schemes in the UK.

"As chair of the corporate trustee that will oversee the new scheme, I would like to thank all our advisers, service providers and the executive team for their support throughout the authorisation process, and in preparing for this moment.

"The trustee directors are looking forward to putting this new model into action and delivering for our members.”

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