Zurich to set up new Royal Mail DC scheme
UK - Royal Mail has appointed Zurich to provide a new defined contribution (DC) scheme starting in April 2009.
Royal Mail confirmed last year the defined benefit (DB) scheme would be closed to new members from 31 March 2008 and new employees starting after this date would be eligible to enter the DC scheme after one year,
as part of the reforms to its pension schemes. (See earlier IPE article: Trustees side with Royal Mail over DB reforms)
Following a competitive tender process, Royal Mail has appointed Zurich to provide a "bundled bespoke package of investment, administration and communications services", which must be ready to accept the first contributions from 1 April 2009.
Jon Millidge, chairman of trustees and human resources director at Royal Mail Group, said: "The trustee board followed a through due diligence process in selecting our chosen partner for what we believe will become one of the largest DC schemes in the UK."
It is anticipated the new scheme will receive around 9,000 new entrants each year, potentially making it one of the largest DC schemes in the UK, and Zurich will be responsible for the provision of:
Stephen Lefley, distribution director at Zurich Corporate Pensions, said: "We look forward to working closely with the trustees and Royal Mail Group over the coming months as we embed the new scheme within the organisation."
"We are confident that by engaging with potential members through effective communications, we can encourage active scheme participation from Royal Mail employees," he added.
The establishment of the new DC schemes follows suggestions that the deficit in the DB pension scheme, which has been recommended to be taken on by the UK government, could have reached as high as £8bn in the recent market volatility and is potentially deterring private investment in the organisation. (See earlier IPE article: Royal Mail's £8bn deficit deterring investors)
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