Royal Mail gets GBP91m tax credit from closing its pension scheme

[TrueBlueTerrier]

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Royal Mail risked infuriating postal workers further on Thursday when it revealed it had booked a £91 million tax credit following the closure of its generous pension scheme.

But the postal company warned a strike over pensions could hurt profits. Chief executive Moya Greene said talks with unions would continue up to Christmas and beyond, if necessary. “Everyone here knows how important this is and I’m hopeful that they will deliver Christmas,” she said.

Greene insisted that securing a deal with union CWU over a replacement scheme was her number one priority. “We have the best people here and I absolutely want to keep it that way but we have to make sure that we have a sustainable business,” she said.


Royal Mail says its pension payments under the old scheme would have risen to an unaffordable £1.25 billion in 2018.

Royal Mail called the tax credit “a technical adjustment” from which it would get no cash benefit.

Hedge funds have targeted Royal Mail shares as it tries to settle the dispute with workers, while facing falling letter volumes in the UK and a very competitive parcels market.

But Royal Mail revealed it had its best half since 2014, with its overseas parcels operations seeing revenues climb by 19%.

Parcels arm GLS, which recently began operating in California, now provides 35% of group operating profits. Parcels revenues in the UK were up 6%, although addressed letter volumes fell by 5%. Pre-tax profits for the half year were down 30% to £77 million although revenues climbed 2% overall to £4.8 billion.

Greene said the sharp slowdown in business mail, which had been attributed to business’s lack of confidence following the Brexit vote, had moderated.

[nataddick]

How little the supposed experts from the press and CWU really know. If they read and understood the latest RM Financial Report for the half year, they might begin to understand RM’s assumptions about the intended use of the ‘surplus’ after the scheme’s closure on 31 March 2018. The tax credit is really a side issue