about how pensions are paid to people who have already retired.
But this 'black hole' in the pension fund is what the actuaries (number-crunchers) have forecast will happen, based on a number of important assumptions. Their job is to calculate the cost of future pensions and raise the alarm if the level of contributions looks likely to fall short of the funds that might
have to be paid out if all existing employees continue in service with RM right up to their retirement date and therefore get a full pension.
As with all final-salary schemes, the amount you receive in your weekly pension is dictated in part by how many years contributions you have paid in, surely ? It surely isn't the case that someone who joins RM at age 64 would get the same pension as someone with 40 years service ?
What I was trying to say was that if
large numbers of people leave under EVR, then obviously, the pension scheme no longer gets the weekly contributions from those people, or RM's matching contributions. But it must also mean that the future
liability - the amount the pension scheme might have to pay out - is also drastically reduced, especially for people who might otherwise have racked up many more years of pensionable service and thus be entitled to a much bigger pension.
As far as I understand it, the 'black hole' - whatever figure these people put on it - does not exist yet
. It represents a potential
liability if all other things remain the same as they are now. Any prudent employer is required to make provision for this potential (and that's the key word) liability, and that is why RM is having to set aside huge chunks of operating profit over the next 17 years, to meet this potential gap in funding. We all know why this has come about, i.e. succesive governments taking contribution holidays, but what I'm saying is that if loads of people leave on EVR terms, the size of the potential liability may even reduce slightly, given that many posties switch to night shift duties in their last few years, to try to boost the final salary on which their pension is based. IF I am correct, and RM are locked-in already to a plan of action to that addresses the potential liability as it stands today, another round of EVRs may result in the pension scheme becoming 'solvent' slightly earlier than the predicted 17 year forecast, because the future liability is reduced by paying smaller pensions to those that left early to take up - hopefully - other jobs elsewhere after taking EVR.
Just to make it clear, though. I only support VOLUNTARY redundancy, for those who are WANTING to leave. I am still vehemently opposed to any idea of compulsory redundancies