Pensions concerns

Industrial action will not be ruled out, unions vowed, after the Royal Mail today (April 13) announced that it would close its pension plan in its current form, potentially depriving thousands of workers more than ÂŁ100,000 over the course of their retirement.

In a statement issued today, the Royal Mail said that although the pension plan – which has 90,000 members and ÂŁ7.4bn in assets — is currently in surplus, this surplus will run out in 2018. The company now pays ÂŁ400m into the pension fund but said that by next year if no changes are made this could more than double to ÂŁ1bn.

“We have concluded that there is no affordable solution to keeping the plan open in its current form,” the statement read. “Therefore, the company has come to the decision that the plan will close to future accrual on 31 March 2018, subject to trustee approval.”

Royal Mail unions including Unite and the Communication Workers Union (CWU) have hit out against the company’s reasoning and urged the company to keep its pensions promises.

The CWU calculated that staff could lose up to a third of their retirement income – the union said that, for example, a 50-year-old earning £25,000 who plans to retire at 65 will lose more than £4,000 each year in retirement – amounting to £109,800 over 25 years.

The statement from the Royal Mail today comes in the wake of a consultation over the future of the pension scheme, which opened at the beginning of the year and closed on March 10.

CWU acting deputy general secretary Ray Ellis argued that the consultation, which asked for the views of members and their unions, was —  in light of today’s announcement  — disingenuous.

“Although Royal Mail’s own consultation exercise revealed massive opposition to its closure plan, the company has decided to ignore the views of its workforce and proceed with closure without consent,” he said.

Unite officer for the Royal Mail Brian Scott said that Royal Mail’s announcement today was “a cause for serious concern for a hardworking and dedicated workforce.”

“The announcement is to close the two current sections at the end of March 2018 and the important part will be the replacement scheme which we are in ongoing discussions about,” he explained.

“The Royal Mail Pension Plan (RMPP) is not closing in its entirety as the replacement pension scheme will embrace part of that,” Scott added. “It is very likely that it will still be a different form of the current defined benefit scheme.

“We will study the implications of today’s announcement very carefully and consider all the options going forward. If we don’t achieve a satisfactory outcome, we can’t rule out an industrial action ballot on this issue.

“We will be consulting our members closely on the next steps in the coming days and weeks.”

Unite has about 6,000 members working for the Royal Mail that is now a privately-owned company, following its controversial sell-off by the coalition government after five centuries of state ownership.