Revealed: CPI impact on Royal Mail scheme members

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Some Royal Mail Pension Plan scheme members received a 1.5 percentage point decrease in pension payments compared to other members due to the CPI switch, annual accounts show.

Members in section A and B of the scheme and deferred pensioners received a 3.1% increase in April this year, reflecting the change in Consumer Prices Index inflation for the year ended September 2010.

However, section C members benefitted from a 4.6% increase in accordance with the rise in Retail Prices Index inflation.

Section C provides benefits for members who joined after 1 April, 1987 with section A comprised of those who became members before December 1971 and section B for members of who joined after 30 November, 1971.

Royal Mail Pension Plan said: "The trustee took legal advice on this matter and held discussions with the employer and with the unions. The trustee concluded that this change affected occupational pensions including the plan where the pension increase rule required the trustee to apply statutory increases.

"Members of the plan have been sent an announcement detailing the effect that this government-imposed change has on the basis on which their pensions will be increased with effect from April 2011."

The annual accounts showed employer contributions to the scheme dropped to their lowest level for five years in 2011 down to £757m from £859m last year. In 2007, the employer contributed £789m.

Total membership also dropped during the year from 436,991 to 431,622, with employee members decreasing from 138,827 to 129,678 as at 31 March, 2011.

Investment management performance fees also dropped significantly from £40m in 2010 to £23m in 2011, as revealed by PP last week.

A Royal Mail representative said the scheme paid performance-related fees if managers exceeded their targets and this accounted for much of the difference.


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