LTB 192/12 European State Aid Approved – Pension Solution

[POSTMAN]

21 March 2012
LTB 192/12 European State Aid Approved – Pension Solution

No: 192/12
Ref: 67000
21st March 2012




TO: ALL BRANCHES WITH POSTAL MEMBERS



Dear Colleague



European State Aid Approved - Pension Solution


Further to LTB 186/12 the Government has announced today that the European Commission has granted the Royal Mail Group State Aid.



Firstly, this means the final part of the process to implement the pension solution is triggered. This involves the Government placing what is known as a Commencement Order before Parliament next week and will mean the pension changes will be implemented on the 1st April 2012.



Secondly, the European Commission has also given the Government the authority to restructure the Royal Mail balance sheet. We understand that this means the company will no longer have to repay existing Government loans which we estimate is worth just over £1 billion. This is separate from the pension solution. However, although the Government now have the authority to restructure the balance sheet it is a matter for them to determine if and when this happens.



At this stage we have not had the opportunity to study in detail the full terms of the State Aid approval case and we would want to consider further the extent of any conditions that may be attached.



The CWU has supported the case for State Aid approval and welcomes the implementation of the pension solution, something which we were the first to campaign for. We have attached to this LTB a summary of what this means for our members.



Prior to the solution being implemented on the 1st April 2012, CWU members will receive a mailing to their home addresses which will include a letter and pensions pamphlet explaining all the issues in more detail. Postal Branches can download an advanced copy of the member's letter and pamphlet from the Union's Website (http://www.cwu.org/54871/royal-mail-pensions.html" onclick="window.open(this.href);return false;)



Once we have had a chance to look at the full terms of the announcement we will provide further information to Branches particularly in relation to any conditionality.

We have also attached the CWU Press Release.

Any enquiries on this LTB should be addressed to the DGS(P) Department.

Yours sincerely

Dave Ward W Hayes
Deputy General Secretary (P) General Secretary

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http://www.cwu.org/news/archive/54870/- ... s-cwu.html" onclick="window.open(this.href);return false;

‘Good news for Royal Mail pensions’ says CWU

The European Commission has announced today (Wednesday) that it has ruled in favour of Royal Mail Group receiving State Aid approval to allow the UK government to take on the Royal Mail pension scheme and deficit. Responding to the announcement, the CWU says it is "good news for postal workers" and claims the decision as a success for the union's campaign.


Commenting from Brussels where he sat in the Commission's press conference, Billy Hayes, CWU general secretary, said: "The lifting of the pensions deficit came from the CWU. We've been campaigning for the government to take on the pension deficit for years and the success of our campaign is a result of thousands of CWU activists and their work. People laughed in our faces when we suggested it so it's been a long journey getting here.

"Today's announcement will protect the pensions of postal workers who have faithfully paid contributions for decades. We've consistently argued that the government has a moral obligation to take on the pension deficit, partly as owner of the company and for allowing Royal Mail to take a 13 year contributions holiday.

"We remain strongly opposed to privatisation. Nationalising the debt and privatising the profit doesn't make sense. It's not in the interests of customers, workers or the taxpayer. Royal Mail is now £8.4bn better off and the case for privatisation weaker still."

The European Commission described the pension deficit as placing "excessive pension costs" on the company. Commission Vice President in charge of competition policy Joaquín Almunia said: "In order to achieve a level playing field in postal markets, it is crucial that incumbent operators neither enjoy undue advantages, nor suffer from structural disadvantages in comparison with competitors. The relief of excessive pension costs and the restructuring aid approved today will help ensure this balance for Royal Mail and its competitors."

Dave Ward, CWU deputy general secretary, commented: "Today's announcement is good news for postal workers. Without these changes the Royal Mail Pension Plan would be under major threat of closure and continue to destabilise the company's finances. The changes will help transform the finances of the company and protect jobs.

"CWU remains fundamentally opposed to privatisation, but we have always supported and campaigned for the need for a pension solution and changes to regulation.

"Without a pension solution the consequences for our members and the company would be very severe, including the strong possibility of the pension scheme being completely wound up. This would still remove a barrier to privatisation but without securing our members' pensions. Without this change it would be a lose-lose situation."

The Royal Mail Pension Plan has a deficit of £8.4 billion. The transfer of assets will give the Treasury a short-term boost of £28bn but the lifetime costs will be far higher than the value of the assets. Royal Mail will continue to run a pension scheme which will be deficit-free at the point of transfer.

[POSTMAN]

pension.pdf