Postmen hit as Royal Mail mulls axe for pensions

[TrueBlueTerrier]

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Royal Mail rang the death knell for one of the UK’s last surviving major final salary pension schemes today, threatening the retirements of 90,000 postal workers.

Royal Mail, privatised in 2013 at 330p a share in a highly controversial float, today said it has started a “consultation process” with staff and unions over changes to pensions.

The move won’t affect those who have already retired, or directors such as £1.5 million-a-year chief executive Moya Greene, who are not in the scheme.

The Royal Mail’s giant fund has assets of £7.4 billion and, unlike many other schemes, is presently in surplus to the tune of £1.8 billion.

It says that surplus will run out in 2018 and that it would have to pay in £1 billion a year, up from £400 million now, to keep running the fund, which it last year labelled “simply unaffordable”.

Though the company insists no decision has yet been taken, it seems highly unlikely that the final-salary scheme will be retained.

The average pay at Royal Mail for so-called frontline staff is £23,000. It pays £200,000 a year into Greene’s pension.

A spokesman said: “We will actively consider any other affordable proposals that members or their representatives put forward during the consultation.” The consultation ends in March.

The announcement, so soon after the key Christmas period, is likely to spark anger. By shifting from a final-salary pension to a so-called “defined contribution” scheme, staff are left at the mercy of the stock market for their retirement income.

Unite, already at war with the Post Office over changes to pensions, said it could not rule out strike action.

Royal Mail insists the new deal it is offering will be “competitive compared to our industry”. It notes that few FTSE 100 firms still have a final-salary scheme. Tesco and Marks & Spencer are among big businesses recently to have taken an axe to staff benefits.

This week it emerged that the final-salary pension deficit of the UK’s top 350 listed companies has trebled in a year to £137 billion.

Royal Mail blames tough “financial market conditions” for its move on pensions. Low returns on bonds have made it difficult for pension funds to meet liabilities.

However, stock markets here and in the US have hit record highs lately.

Royal Mail staff were given shares in the company when it joined the stock market. They quickly soared, leading to accusations the Government had sold the asset off too cheaply.

The sale of Royal Mail was one of the few opposed by Margaret Thatcher. The former prime minister once remarked that she was “not prepared to have the Queen’s head privatised”. Royal Mail is 500 years old.

[walkthewalk]

It writes at the top moya greene is not in the scheme, but pays £200,000 into her pension........ am i missing something her........,,

Not in it...... but paying her pension.... wtf....

It's called daylight robbery

[masterblaster]

So in April 2018 (sic), the amount RM contribute would rise from 17% to 50% ? How do they work that one out?
As the proposed (Union will agree to anything) sweetener of £750 would be paid 31st March 2018, surely you would get that even if you didn't want to pay into the DC pension?
As the charges for investments are more in the first years, (so whoever is running it is certain of their dosh), is there much point in paying in if you are nearing retirement?

[Blackburn4511]

It writes at the top moya greene is not in the scheme, but pays £200,000 into her pension........ am i missing something her........,,

Not in it...... but paying her pension.... wtf....

She is in a different scheme.

[Hawkey99]

That is a great point Master blaster.

Does anybody know if thats 100% correct for Pension investments......

[RobertT]

There was a time when management charges for equity investments via a pension were front loaded and it’s true that many people would have lost out in the early years. But those type of schemes are now largely obsolete, except perhaps a small number where the individual hasn’t bothered to transfer out to a more acceptable scheme.

These days charges are just a certain percentage of the value per year.

[Destiny]

As I thought previously PT staff are rolling their eyes at any action.
As one put it "I'm losing nothing unless I strike"
If someone is in the know explain how I sell it to them? (Pension only)

[clashcityrocker]

As I thought previously PT staff are rolling their eyes at any action.
As one put it "I'm losing nothing unless I strike"
If someone is in the know explain how I sell it to them? (Pension only)

Why weren't we on the gate in 2008 when our colleagues were enrolled in the inferior scheme?