UK - Royal Mail warns of price hikes if trustee demands over slashing the pension scheme deficit go ahead.
The Royal Mail Pension Scheme trustee board wants the time taken to clear the scheme’s £4.5bn deficit cut from the previously agreed 40 years to 12 years.
It also wants equity holdings to be reduced from 80pc to 65pc to contain any shortfall in stock market falls.
Royal Mail has already agreed to make an additional payment of £140m on top of this year’s £310m annual contribution but says the trustees’ demands could see annual payments rocket to £800m – double its expected 2004 profits.
A spokesman said: “If the trustees make this decision to clear the deficit within 12 years and increase the proportion of assets in bonds, we could see this year’s £450m payment rise within a year or two to £800m.”
The £16.5bn scheme is the sixth largest in the UK with 180,000 active, 72,523 deferred and 166,000 pensioner members.
The company added that while it was making an overall profit of £1m a day, areas such as stamped (non-business) mail was still operating at a loss of £240m a year.
“We need to re-balance our prices,” said the spokesman. “Due to regulations we can’t just raise them as we wish and we’d rather not anyway bec-ause of competition, but there is the challenge of dealing with the pension fund and prices will need to be looked at.
“We’ve given a commitment to our people that our fund is a final salary scheme and will remain open to new members. We remain committed to our obligations.”
Standard Life has increased exposure to risk assets in three out of five funds in its Active Plus and Passive Plus workplace pension ranges.
Some 48% of employers are unaware of the services or help they offer to members of their defined contribution (DC) schemes, according to Aon.
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