Royal Mail slashes scheme deficit by £3.5bn despite heavy lo

[TrueBlueTerrier]

Royal Mail slashes scheme deficit by £3.5bn despite heavy losses

http://www.professionalpensions.com/pro ... avy-losses" onclick="window.open(this.href);return false;

The Royal Mail has cut its pension scheme deficit by 45% after a change in inflation assumptions, despite suffering losses of more than £49m last year.

In its annual report, published yesterday, the group said the deficit of its two schemes - due to be taken on by the tax payer in advance of the service's privatisation (PP Online, 14, October, 2010) - had fallen from £8bn to £4.5bn on an IAS19 basis.

An actuarial gain of £3.4bn from the change in inflation measure used to determine statutory minimum indexation from the Retail Prices Index to the Consumer Prices Index accounted for most of the reduction.

The group admitted, however, that the deficit had left it technically insolvent - and the fact that pensions assets and liabilities and the net deficit were significantly larger than any of its other assets and liabilities left it particularly exposed to pension volatility.

Yearly deficit recovery payments increased from £291m to £299m - including £7m for the Royal Mail Senior Executives' Pension Plan - in line with the 38-year recovery plan agreed at the last triennial evaluation (PP Online, 10 September 2010).

Royal Mail reported it had reduced regular contributions from £526m to £442m, in line with lower pensionable pay and a reduction in the regular rate of employer contributions for the Royal Mail Pension Plan from 20% of pensionable pay to 17.1%, effective from April this year. Employee contributions remained at 6%.

It added pensions interest charges had halved from last year to £167m, mainly due to an increase in expected returns on assets as a result of the increase in fair value of assets at March this year.

It also reported a £17m increase in operating pension costs to £458m - principally as a result of market conditions leading to a pension charge of 17.8% of pensionable pay, compared to 16.8% last year, offset by a reduction in the number of people employed.

The business also announced it had substituted £102m of the £1bn of investments held in escrow as security for the RMPP since March 2007 with mortgages against property assets.

The wider results, which saw the group slump from a £113m profit last year to a £49m loss, could delay the government's plans to sell off the service, finalised last week (PP Online, 10 June).

[westlondonpostie]

http://www.professionalpensions.com/pro ... avy-losses" onclick="window.open(this.href);return false;

No wonder the Government is in such a hurry to take on our Deficit...... The f***ers are gonna swallow up out pension pot of £28bn and I wouldn't trust the bastards as far as I could fire em out of my arse to pay it back!

[nataddick]

Good report on the current pensions situation.

Fails to mention that CWU and members have not been advised of change from RPI to CPI! Also, the £299 million used to pay towards the pension deficit would have been additional profit had the scheme been properly funded and not insolvent. Don't suppose the extra £299 million will be available for colleague share payments post privitisation?

Funny that the size of the pension deficit was used as one of the three main reasons for non-payment of colleague shares !

Where are the CWU ? - they should be trawling through the accounts and demanding explanations !

[belle smith]

Good report on the current pensions situation.

Fails to mention that CWU and members have not been advised of change from RPI to CPI! Also, the £299 million used to pay towards the pension deficit would have been additional profit had the scheme been properly funded and not insolvent. Don't suppose the extra £299 million will be available for colleague share payments post privitisation?

Funny that the size of the pension deficit was used as one of the three main reasons for non-payment of colleague shares !

Where are the CWU ? - they should be trawling through the accounts and demanding explanations !

£299 million towards the deficit, and the rest!