Mail pension deficit over £5.9bn

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Mail pension deficit over £5.9bn


The government's plans are due in parliament on Thursday
The Royal Mail pension fund deficit is "significantly larger" than the £5.9bn in the Hooper Review, according to its trustees, in a letter seen by BBC News.
Current government proposals involve the bigger-than-expected shortfall being funded by taxpayers.
In the letter the chair of trustees, Jane Newell, warns that the deficit is so big that the Pension Protection Fund would struggle to support it.
She says that the part-sale of Royal Mail is the only way to save the fund.
The government's proposals, based on the Hooper Review, are due to be introduced in Parliament on Thursday.

The deficit... is highly unlikely to be affordable by Royal Mail, with potentially devastating consequences
Jane Newell
Ministers want to sell a stake of about 30% to the private sector to help pay for the modernisation of the service.
The leaking of the letter this week may be seen as an attempt to assist the passage of the controversial legislation.
'Devastating consequences'
BBC business editor Robert Peston describes the hole in the pension fund as shocking, especially as it is planned to be a liability for taxpayers.
Ms Newell warns that the pension deficit is "highly unlikely to be affordable by Royal Mail, with potentially devastating consequences".
She says that if the pension plan were to be wound up today, it "would not even be able to provide as much as 50% of members' benefits".
The pension plan has 450,000 members.
The government's proposals face opposition from a large number of Labour MPs, with 139 signing a motion opposing a sell-off, and from unions who plan a protest on Tuesday.
But the Conservatives and Liberal Democrats have backed the move in principle.
'Deeply unpopular'
In December, Business Secretary Lord Mandelson, to whom Ms Newell's letter is addressed, endorsed the recommendations of an independent report that called for a minority stake in the business to be sold off.
He said Royal Mail could not survive in its current form, due to severe financial constraints and falling demand for sending letters, and needed fresh investment in technology to prosper.
He denies the plan amounts to a sell-off of the business, saying it will be a "partnership" that maintains Labour's commitment at the last election to keep Royal Mail in public ownership.
But unions will stage a mass protest on Tuesday against the plans, which they say are "deeply unpopular".
"We urge the government to take responsible action and respond to the justified concerns of UK citizens who do not want to see this valuable public asset carved up," said Billy Hayes, general secretary of the CWU union.
Unions point to the fact that Royal Mail made a profit of £255m in the last nine months of 2008 and argue that it is healthy and can thrive in its current form.
The protest will come on the same day as Royal Mail bosses are questioned by MPs on their plans for the company.
The plans could potentially result in the largest backbench rebellion of Gordon Brown's premiership.
Unless Labour rebels are persuaded to back the measures, the government may have to rely on opposition MPs' support to get them through.


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[fmrPOSTIE]

Anybody watched the video of Mandelson?

"...We are not going to privatise Royal Mail"

Outright Liar. What is it if 30% of the Company is sold then?

[BELIAL]

Fed up of hearing about this deficit s**t. If you dont pay your mortgage for 17 years then you will have arrears, dont think you would get away with demanding that your neighbours pay it for you.
Lets not forget the accounting methods they use to calculate the so called deficit as well,and we all know just how creative RM can be with their accounts (just ask their auditors Ernst and Young , "do not conform to internationally recognized standards of accountancy")
Using the same model for analysis I wonder what the deficit for state pensions would be? £5 trillion,£9 trillion?

[NWpostie]

It all started in 1997 with Gordon Brown, he taxed profits and reduced Tax relief as well as the Pension payment holiday, at the time the management said "it will be alright we are in surplus"

[borders]

its a disgrace , pensions are deferred wages , they pocketed our pay for 13 years and now expect someone else to pay for it, exactly what they did to the Miners Pension Fund i might add.

[terrace]

Crozier reckons when the Pension is revalued,sometime in late March 2009,it will show beteween £8bn and £9bn deficit.

[DGP1]

The pension issue is really a red herring, in 5 years time whenever the stock-market has recovered the deficit will be much smaller (or depending on how the market does, could even be in surplus), the deficit is worked out that everyone in the scheme taking the full due pension at a snap shot in time.

[antcpfc]

how much bigger would the deficit be if we were still on a final salary scheme?And have the union given up on getting us back on one/

[Yahoorsur]

rather daft accounting rules for such long term public sector schemes which base liability deficits on the barmy assumption on what would happen if everyone retired or died - tomorrow. The oft quoted £8-9 billion “deficit” is just a nonsensical and meaningless calculation.

[BELIAL]

We need to coin a new phrase. I'll start
Lies ,dammed lies ,statistics and, Mandelsons

[k979aaa]

We need to coin a new phrase. I'll start
Lies ,dammed lies ,statistics and, Mandelsons

I will shorten it for you: DAMM MANDELSON :mfo

[BELIAL]

As an aside ,can anyone name a pension scheme in surplus right now

[baldrick]

Sir Fred Goodwin's ?

[baldrick]

And Adam Crozier's. :cfo

[k979aaa]

GORDON BROWNS