The chairman of Royal Mail’s pension trustees is considering plans to close its retirement scheme to existing members after legislation to part-privatise the postal service was shelved last week.
It is understood that Jane Newell is mulling over whether the best option for postal workers is to close the pension scheme and force members to join a new retirement pot with far less lucrative benefits. As chairman of the trustees, Ms Newell has the power to shut the scheme but any decision would also be dependent on the agreement of Royal Mail’s management.
It is feared that such a move would trigger strike action across the country as heavily unionised postal workers opposed the future loss of generous final-salary pension benefits.
Lord Mandelson, the Business Secretary, told the House of Lords last week that proposed legislation to reform Royal Mail by selling a 30 per cent stake in it had been shelved. Had he been able to attract £3 billion for the stake and convince the 140 backbench Labour MPs who oppose the move, the Government would have taken responsibility for the Royal Mail pension pot.
The pension scheme has a deficit of £3.4 billion and a revaluation now under way is expected to show a deficit of up to £10 billion. Such a shortfall would almost triple the sum that Royal Mail would have to contribute to the fund and plunge the postal service deeper into the red.
The trustees are furious with the Government and Royal Mail for failing to secure legislation that would have reformed the postal group. It is understood that they are seeking meetings with Royal Mail management to discuss how best to cope with the pension deficit.
Donald Brydon, Royal Mail’s chairman, indicated last month that he was ready to close the group’s final-salary pension scheme if the Government failed to partly privatise the postal group. He said: “If we don’t get this relief from the Government, we are going to have to look at . . . closing the pension scheme to existing members.”
Effectively, reform of Royal Mail has now been delayed until after the next general election. However, it is feared that by the time the next administration begins to grapple with Royal Mail’s future, the postal operator’s pension deficit will have ballooned to £10 billion and the group will have lost even more business. Volumes are declining by 10 per cent annually.
A spokesman for the pension trustees declined to comment on Ms Newell’s plans to close the scheme. Lord Mandelson said on Friday he was unaware of such proposals and Royal Mail was unavailable for comment.
The full ire of Royal Mail’s unions will be felt this week when postal workers across London begin a three-day strike, threatening to disrupt post for at least a week. It is widely feared that the Communication Workers Union, which represents postal workers, and Unite, the union whose members include mail managers, will call for walkouts over any substantive change to pension arrangements. Royal Mail’s pension scheme has about 450,000 members and payouts are calculated according to career average pay.
then what happens when they go back up again, does that mean we get back our 'gold plated' pension 
Still not clear on being 'forced' to pay into a 'less lucrative'pot? If they close the current fund--I do not want to be forced into paying into any more for mythical pensions I will keep the money myself.!Surely it is voluntary, and we cannot be forced into shelling out? Also, can you imagine if they did close, and no one elected to pay into a new 'pension'the vast amount of money that would be lost to the government coffers?