Royal Mail risks strike backlash over pension scheme closure

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by Daniel Farey-Jones Brand Republic 28-Mar-08, 14:25

LONDON - Fresh Royal Mail strikes look possible after the company decided yesterday to go ahead with a number of changes to its pension scheme without agreement from the Communication Workers Union.

Royal Mail yesterday agreed with the pension fund trustees that its final salary scheme will close to new members from March 31.

The agreement also means that benefits earned after April 1 2010 cannot be taken until employees reach the age of 65, as opposed to the current threshold of 60.

The union reacted saying it is currently balloting all Royal Mail employees on rejection of the plans, and the ballot result will be announced on Tuesday April 1.

The union executive will meet that day to consider its next steps.

Last year, rolling strike action severely disrupted postal services in the UK between June and October, after union members rejected Royal Mail's proposals on pay, pensions and modernisation.

The move came as Royal Mail was criticised by postal regulator Postcomm for failing to adapt to the changes in the mail and wider communications market.

Nigel Stapleton, Postcomm chairman, said: "Royal Mail's problems are a lot more deep-rooted than having to deal with modest amounts of mail competition and regulation. Royal Mail is experiencing some fundamental changes in how senders are using mail following the rapid growth in the use of email, text messages and the internet for communications and marketing."

He added that the clock cannot be wound back on the competitive developments facing Royal Mail, which he argued were bringing significant developments to customers.

"It is perfectly possible, however, for an organisation of the scale and reach of Royal Mail to transform its business and customer services rather than to remain locked in the past.

"We have been waiting far too long for this to happen and decline will be irreversible if these nettles are not grasped quickly."

Postcomm made the comments in its submission to the government's review of the postal sector, announced in December.

The review is intended to: assess the impacts of the liberalisation of the UK postal market; explore trends in future market development; and consider how to maintain the universal service obligation in the light of those factors.