Royal Mail share price drops 2.8 per cent as it unveils new pension plan

[TrueBlueTerrier]

http://www.cityam.com/263772/royal-mail ... nveils-new" onclick="window.open(this.href);return false;

Royal Mail's share price dropped 2.8 per cent in mid-morning trading, after the postal group released an update on the future of its pension plan.

The company announced earlier this month that it would be shutting its pension scheme next year, but has been in talks with unions over a counter proposal.

A consultation on the future of the pension scheme came to an end on 10 March, and today, Royal Mail said it was still "looking at options for the accrual of retirement benefits" after 31 March 2018, when its scheme is due to close.

The options on the table include a defined benefit cash balance scheme that builds on a proposal put forward by the Communication Workers Union (CWU).

Royal Mail said this plan represented a "materially lower" risk to the company than the current plan does. "The company would also take steps to manage risk further through an appropriate investment strategy and a proportion of the company contributions would be held as a pension risk reserve for additional security," Royal Mail said.

The proposed scheme includes elements of a CWU proposal, Royal Mail said, "without some of the inherent risks to the company that, in our view, the CWU scheme would have created".

"We very much appreciate the care that the CWU applied to its proposal and we have agreed to meet them to discuss it further," the group commented. "However, at the moment we do not believe the CWU proposal, in its current form, meets the fundamental principles underpinning our 2018 Pension Review. These are: sustainability, affordability and security.

"We believe that the defined benefit cash balance scheme would be a fair proposal that compares favourably with the retirement benefits offered in our industry and by other large UK employers. We will continue to discuss the future of the plan with our unions CWU and Unite/CMA. We will write to plan members once more decisions have been made."