Royal Mail workers vote in favour of pensions deal; paves way for CDCb

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Postal workers have voted strongly in favour of a deal that includes plans to set up the UK's first collective defined contribution (CDC) pensions scheme, during a Communication Workers Union (CWU) ballot on 28 March.

On 28 March, the union's members voted by a margin of nine to one in favour of the pensions, pay and working conditions package announced by Royal Mail in February, which also included an agreement in principal to work towards a collective defined contribution (CDC) scheme for all employees, subject to legislative changes.

Commenting on the vote, CWU deputy general secretary Terry Pullinger said: "Now the agreement is signed, the hard work begins on ensuring this comprehensive, long-term deal is implemented in full across Royal Mail Group."


A spokesperson for Royal Mail said the company was very pleased its workers had accepted the deal, which CWU said averts the threat of strikes and lays the foundations for the CDC scheme.

Setting up a CDC scheme depends on legislative changes, with recent suggestions that the company could set one up if changes were made to secondary legislation.

The pensions minister recently said the government is "minded to assist" any CDC proposal that may arise from Royal Mail and the CWU, but given "there is only one person in the queue at this moment", it would not proceed solely for the postal firm and its workers.

Guy Opperman said the Department for Work and Pensions would instead seek to gain further information on the changes needed to enable CDC schemes for all companies, if evidence supports this. This will include meetings between the DWP, its advisers, The Pensions Regulator (TPR), and both Royal Mail and the CWU.

The Royal Mail/CWU pensions deal
The Royal Mail Pension Plan (RMPP) will close to future accrual in its current form on 31 March 2018.
Royal Mail and the CWU have committed to work towards the introduction of a CDC scheme, subject to necessary legislative changes being enacted.
Transitional pension arrangements will be put in place from 1 April 2018 until a CDC scheme can be established. These comprise a DBCBS and an improved Defined Contribution scheme.
The ongoing annual cash cost of pensions will continue to be around £400mn.