LTB427/16 Post Office: Defined Benefit (DB) Pension Scheme - Update

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LTB427/16 Post Office: Defined Benefit (DB) Pension Scheme - Update

No.427/2016

15th July 2016



POST OFFICE: DEFINED BENEFIT (DB) PENSION SCHEME - UPDATE

Dear Colleagues

Yesterday the Post Office announced its decision with regards to the proposal to close the DB Pension scheme. Neil Hayward, Group People Director, stated the following in a communication to members (attached to this LTB for your information):

“Following the consultation process our recommendation was still to close the DB Plan to future accrual and transfer members to the company’s defined contribution scheme but to do that from the end of the financial year (March 2017) rather than at the end of August 2016”.

The pension Trustees met on Tuesday and Wednesday this week to consider whether to accept the Post Office’s recommendation and agree a rule change to allow the closure of the scheme (the rule change needs to be made by the Trustee before the Post Office can go ahead with the closure). However, the Trustees feel they need more time to consider the Post Office’s recommendation and therefore a decision on whether to amend the rules has not yet been made. The Trustees’ next meeting is on 27th September.

As a consequence of our strong representations, campaign and the information contained within our “Body of Evidence”, the proposed date of closure has been moved from the end of August 2016 to the end of March 2017. Also, pre-2012 benefits will revalue from closure until members leave the Post Office in line with RPI rather than CPI which was the original proposal. Whilst these two developments are positive, they are simply a step in the right direction. However, our firm view is that the DB scheme should not be closed as there remains a healthy surplus which can be used to fund ongoing accrual for the foreseeable future.

Press Coverage

An article has been published in the Guardian today in reference to the Post Office’s proposal to close the scheme, with a quote from both the CWU and Unite. The article includes criticism of the Post Office’s plans to privatise Crown Offices and can be accessed by using the following link:

https://www.theguardian.com/business/20 ... ntribution" onclick="window.open(this.href);return false;

There was also an article in the City AM News this morning.

Next Steps

With the assistance of our legal experts we have written to both Paula Vennells and the Chief Executive of the RMPP with regards to the Post Office’s proposal to close the scheme. We are now seeking further advice from the legal experts as to next steps. We will continue to put pressure on the Post Office and also the new Business Secretary, Greg Clark about these outrageous proposals.

There is absolutely no need to close the DB scheme at the end of March 2017 as there remains a sizeable surplus which can be drawn upon to continue the scheme; this was the whole point of our members in 2014 giving up their salary link in return for continued accrual.

The proposal to close the DB scheme is simply yet another cost cutting exercise – the Post Office wants to remove the pension scheme from its balance sheet and also save significant amounts of money by transferring members to an inferior DC pension scheme from April 2017 with much lower company contributions. This Union will not stand by and let this happen – it forms part of the current trade dispute with the Post Office and consequently we will be balloting members for Industrial Action to protect the DB scheme.

Further details will be reported.

If you have any queries in relation to this LTB, please contact lsheridan@cwu.org

Yours sincerely



Dave Ward Ray Ellis Andy Furey

General Secretary Acting Deputy General Secretary (P) Assistant Secretary