Pressure mounts on Mail pensions

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Ministers are being urged to explain how they will rescue the Royal Mail's pension fund, after plans to sell off part of the business were shelved.

The government had planned to pay off the fund's £8bn deficit, as part of the part-privatisation deal.

But after the deal collapsed, Business Secretary Lord Mandelson said the pension deficit was "a matter for the company and the pension trustees".

The Tories say the pension fund's trustees are in an impossible position.

The partial sell-off, opposed by unions and many Labour MPs, had been due to go before Parliament before the summer break.

But on Wednesday Lord Mandelson said part-privatisation would be postponed until market conditions improved.

'Don't walk away'

A Labour peer, Lord Clarke of Hampstead, urged ministers to "urgently get down to talking" about the pension fund deficit.

But while Lord Mandelson agreed that the pensions deficit was "a huge and growing burden" on the Royal Mail, he said the government "had to be fair to taxpayers".

He added: "[The government] cannot expect them to take responsibility for the deficit if the other challenges facing Royal Mail are not also addressed."

Conservative business spokesman Lord Hunt told peers that by putting the part-privatisation into "cold storage", the Government was "putting the trustees of the Royal Mail pension plan in an impossible position".

The CWU union, which represents postal workers said it was important that the government did not "walk away" from Royal Mail.

It said: "Changes are needed on modernisation, pensions, regulation and industrial relations which do not need primary legislation but which do need government support."

The union plans to hold a series of walkouts over three days later this month in a row over jobs and services.