UK - Senior executives at Royal Mail are to lose their early retirement provisions as part of a major shake-up of management structure.
The move means that senior managers in the £16bn Royal Mail Pension Plan will swap the right to retire at 50 in exchange for performance-related bonuses and market-rate pay.
Royal Mail Group chairman Allan Leighton, who announced the changes, said they were intended to increase “profit accountability” within the organisation.
Royal Mail pension director Gerry Degaute commented: “Royal Mail is restructuring and it is trying to make its behaviour more like a plc even though it is a public sector organisation.”
However, Communication Workers’ Union pensions officer Lionel Sampson called the changes to management pensions a worrying development, and said any plans to extend this to other workers would be “totally unacceptable”.
But Mercer Human Resource Consulting says early retirement provisions are now seen as a very generous option in final salary schemes.
Worldwide partner Ken Barclay said: “As most companies put costs of pensions up the agenda this is a relatively pain-free way to save some money.
“Some people go DC, some people choose career average, but taking away early retirement is being seen as the easiest option to cut costs.”
He pointed out that the move was not out of step with the rest of the industry and could also be attributed to people living longer.
And he added: “If you take early retirement the chances of living longer are probably increased.”
More needs to be done to speed up DB to DC transfers but, as Jonathan Stapleton says, more also needs to be done to protect members.
The Pensions Ombudsman (TPO) took on 2,566 early resolution cases in 2018/19 after onboarding a team from The Pensions Advisory Service (TPAS), according to its annual report and accounts.
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