UK - Postal workers are threatening industrial action if competition forces Royal Mail to close its final salary pension scheme - the fifth biggest in the UK.
Royal Mail will review its pension arrangements in the autumn amid growing fears that the deregulated postal sector might spell the end of its defined benefit provision.
Industry sources believe Royal Mail – which unveiled a £4.6bn FRS17 deficit in its pension schemes last month – is under competitive strain from a raft of new companies entering the market.
As a result, the firm is having to reassess the viability of its two final salary schemes – worth a total of £12.8bn – and will announce any changes following the triennial review later this year.
When revealing the company’s financial results, Royal Mail chairman Alan Leighton admitted the schemes posed an ongoing problem.
But he assured existing staff their pension scheme would remain intact.Communication Workers’ Union, though, pledged to “do everything possible, including staging industrial action, to resist any plans to close the DB scheme”.
Pensions officer Lionel Samson said: “We see the DB scheme as an integral part of the reward and retention package. We are not panicking yet. Our real concern is about the actuarial valuation.”
The review comes as deregulation of the postal services market brings 20 new companies into competition with Royal Mail.
One of the new entrants, Special Delivery Services, opted for a stakeholder pension because it did not think an occupational scheme would be useful for recruitment and retention purposes.
SDS payroll manager Rob Reynolds explained: “Pensions are not really considered by us because many of our staff tend to be younger and not that interested in them anyway.”
*The Royal Mail is to pump £100m into its pension schemes each year until the £4.6bn deficit is cleared.
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