Royal Mail announces pension plan amendments

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The Royal Mail has announced promotions and increments for its pension plan members will continue to flow through into final salary pensionable pay right up until the conclusion of the next periodic review in 2018.

The decision comes amid news the Communication Workers Union has served formal legal notice to Royal Mail of the intention to ballot members for strike action.

The Royal Mail had previously said it was imposing a basic pensionable pay cap for scheme members as it faces an extra £300m annual bill from its pensions operations.

It also stated changes would see any increase in pensionable pay capped at RPI inflation up to 5 per cent.

Despite Royal Mail’s latest statement, CWU deputy general Dave Ward said: “We want the company to recognise its main asset - its workers - who literally deliver the success of the business."

CWU argued that despite the government taking control of the assets in 2012 to pave the way for privatisation, the company wants to use remaining assets to reduce its own contributions. Royal Mail completed a formal consultation in August and the union is calling for an agreed process to protect members’ benefits.

"There is a great hypocrisy in the way the scheme is being managed by Royal Mail," Ward said. "The company wants to keep its contribution rate to 17 per cent whilst maintaining managers' benefits at 40 per cent. They can afford higher contributions to protect postal workers' benefits."

The privatisation of Royal Mail through a stock market flotation is to happen within weeks, the government has announced.

Business Secretary Vince Cable in July announced to Parliament that the government intended to pursue an initial public offering by selling shares to institutional and retail investors.

The CWU criticised the announcement stating the latest plans were “a betrayal of the British public”.

“This is simply about dogma from old fashioned Tories wedded to privatisation,” the union’s general secretary Billy Hayes said.