Unite members in the Royal Mail Pension Plan (RMPP) have narrowly rejected the company's proposal to set up a 'cash balance' scheme when the plan closes to accrual next year.
The ballot of around 6,000 Royal Mail workers, which closed 7 August, revealed a 51% to 49% split against accepting the proposal, on a turnout of 28%.
Royal Mail's offer would guarantee members a lump sum payment at retirement, based on total contributions of 19.6%, which could be raised further depending on investment performance. It would also provide death-in-service and ill-health benefits.
The postal firm said this would be funded by £400m annual contributions, and risk would be "materially lower" and "manageable" than the current defined benefit (DB) arrangement.
Alternatively, members could opt to join a defined contribution (DC) scheme with company contributions of 13.6%, which Royal Mail said "for some members, this could be a better option".
Unite previously said the proposal was the best possible outcome in a challenging environment, but following the member ballot has added that Royal Mail needs to explain the proposal more clearly.
Unite officer for the Royal Mail Brian Scott said the union would work to simplify but expand the information provided to members.
"The evenly split ballot result demonstrates the complexity of the company's position," he said. "Individuals did not feel comfortable with the proposal they were faced with, bearing in mind it would have a major impact on the income they will receive in retirement.
"Unite will be discussing with the Royal Mail management as to how a more detailed, but also simplified, set of information can be supplied to our members. While the latest pension position was an improvement on the original proposal, ‘the mission to explain' needs greater clarity as these are complex proposals."
A Royal Mail spokesperson said the firm would seek to provide more materials available to members about the "good and fair proposal".
"We will work with Unite to create more materials to explain the pension proposal in greater detail. The company will also undertake a series of workshops for managers about the proposal.
"The pension proposal offers RMPP members a choice between an improved DB cash balance scheme and an improved DC scheme. Royal Mail has also offered the pension proposal to the Communication Workers' Union [CWU], making it available to all 88,000 plan members.
"Royal Mail will continue to engage with its unions on its pension proposal. We believe that it is a very good and fair proposal and compares favourably with the retirement benefits offered in the industry and by other large UK employers."
The CWU, which represents separate Royal Mail workers, had already ruled out supporting the proposal, stating it would be a "significant shortfall in the pensions promise".
The union has proposed a risk-sharing scheme, named the Wage in Retirement Scheme, which would see DB and DC members united in a single pension plan which would provide a guarantee minimum wage in retirement but with inflation-linked increases dependent on investment performance.
