Royal Mail in threat to axe pension fund

[TrueBlueTerrier]

http://business.timesonline.co.uk/tol/b ... 445841.ece" onclick="window.open(this.href);return false;

Royal Mail chairman courts controversy by saying that failure to privatise will end final-salary scheme for 150,000 staff

THE chairman of Royal Mail says he is ready to close the group’s final-salary pension scheme, one of the largest of its kind in Britain, if plans to part-privatise Royal Mail fail.

Donald Brydon’s warning came in the same week as three large British companies – BP, Barclays and WM Morrison – made moves to reduce their future pension liabilities.

Brydon said: “If we don’t get this relief [part privatisation] from the government we are going to have to look at the same option as Barclays and close the pension scheme to existing members.”

The government is committed to selling a stake in Royal Mail’s letters business. But there is only one bidder left in the negotiations – CVC, the private-equity group, and its offer is regarded as too low.

Closing the pension scheme, which is based on career average pay, would be a huge blow to its 150,000 members and could lead to strikes by postmen. “I don’t think they would be pleased, but this is reality,” Brydon said. “The government will not bail out the pension fund and employees if the [part-pri-vatisation] bill is not passed.”

He added: “You can bet that telling our existing members that there is a fundamental risk to their pension is not where I want to be. But if we are unable to get any progress with the government on selling a stake, closing the fund will be at the top of the options list.”

Experts believe other big companies are also considering sharp cuts to pension benefits, including tax-payer-backed banks such as Royal Bank of Scotland, Northern Rock and Bradford & Bingley.

Royal Mail would become the first government body – it is in effect owned by the state – to make inroads into public-service pension entitlements.

Brydon said it had little choice. The deficit in its pension fund could be more than £10 billion when the latest triennial review is published this summer. That would require an additional £500m a year to be injected into the scheme on top of the Royal Mail’s existing commitment.

This could mean more than £1 billion a year of Royal Mail’s profits were being put into its pension fund. Brydon said it was already facing a £800m cash outflow this year.

Brydon’s warning was made on the eve of the Communication Workers Union’s annual conference. The union is already incensed at Labour’s commitment to part-priv-atise Royal Mail.

Meanwhile, the Pension Protection Fund, the government “lifeboat” set up to take on the responsibilities of bust companies, is estimated to have seen its deficit treble in the past 12 months to almost £1.5 billion after being forced to soak up the liabilities of many defunct firms.

There are now 292 pension funds poised to fall into the lifeboat fund. These include schemes run by Woolworths and Lehman Brothers and a giant fund run by Nortel, the collapsed telecoms firm.

Pension experts insist that the protection fund would be bust if it was judged on the same measures as private pension providers.

[ronnie6]

Can anybody clarify what this would actually mean ? If this happened would benefits acrrued to date be safe ? Would there be ANY pension entitlement for new members? Is this suggesting that there will be NO pension fund at all (beyond existing entitlements)?

[BELIAL]

Looks like it could be time for some united action amongst the public sector unions. Not much point in the PCS and others watching on the sideline and keeping their fingers crossed that it won't happen to their pensions. Once the precedent is set other funds will be picked off one by one.
Wonder how long the population will put up with such blatant exploitation? £800 billion to rescue the bonuses of fat cat bankers and then they come looking for the money from the workers whose pension funds are already depleted by the actions and unbridled greed of the very fat cats they are susidising

[randompostman]

this blokes trying to pour petrol on an already blazing fire why

[DGP1]

I may be being a bit thick here but didn't they already close the final salary scheme and add an extra 5 years work onto us so how can they do it again

[randompostman]

i thought your pension that you paid into was protected and ringfenced as final salery its only new payments that are going into the new sceme and i took it he ment to take the old payments out and rip those off as well

[RobertT]

The benefits you have built up to the date of any change will be protected by law,but they will be based on your pay at that date,as if you had left RM.

Any changes are likely to be similar to the Personal Account,which the government are set to introduce in 2012. Where the contributions will be - Employer 4% Employee 3% Government 1% and will be similar to a personal/stakeholder pension where the money is invested in the stock market and the eventual pension we recieve is not based on our salary at all.

Basically we'll see a huge reduction in our pensions due to the mistakes over the years by government,the regulator and the pension trustee.

[DGP1]

The way things are going it would be better to stop paying into a pension fund and just rely of benefits when we get older.

[RobertT]

The way things are going it would be better to stop paying into a pension fund and just rely of benefits when we get older.

Only if you have virtually no pension provision and want to live on the bread line!

[k979aaa]

Got news for you all the final salary pension scheme ended in April 2008!. We are now in a career average scheme!. so not much too lose then!.

[TrueBlueTerrier]

Got news for you all the final salary pension scheme ended in April 2008!. We are now in a career average scheme!. so not much too lose then!.

But they did not close down the FSP scheme just froze the benefits at that particular point and then started a CAS. The threat is they wind up the FSP scheme and everyone looses their accrued benefits etc, although AFAIU at a minimum we get back what we paid into it.

Hopefully someone who understands pensions better than me can explain it better, or in full if I have got it wrong.

[k979aaa]

Got news for you all the final salary pension scheme ended in April 2008!. We are now in a career average scheme!. so not much too lose then!.

But they did not close down the FSP scheme just froze the benefits at that particular point and then started a CAS. The threat is they wind up the FSP scheme and everyone looses their accrued benefits etc, although AFAIU at a minimum we get back what we paid into it.

Hopefully someone who understands pensions better than me can explain it better, or in full if I have got it wrong.

Aperently if you started before 1987 you are in a different scheme to me and others as to the future of these schemes is anyones guess but it would be safer with a socialist govenment unlike we have now!. :mfo

[DGP1]

Got news for you all the final salary pension scheme ended in April 2008!. We are now in a career average scheme!. so not much too lose then!.

But they did not close down the FSP scheme just froze the benefits at that particular point and then started a CAS. The threat is they wind up the FSP scheme and everyone looses their accrued benefits etc, although AFAIU at a minimum we get back what we paid into it.

Hopefully someone who understands pensions better than me can explain it better, or in full if I have got it wrong.

Aperently if you started before 1987 you are in a different scheme to me and others as to the future of these schemes is anyones guess but it would be safer with a socialist govenment unlike we have now!. :mfo

The way things are going it may be better to just put the money on the horses and hope

[Big Daz]

Brydon said: “If we don’t get this relief [part privatisation] from the government we are going to have to look at the same option as Barclays and close the pension scheme to existing members.”

[k979aaa]

Brydon said: “If we don’t get this relief [part privatisation] from the government we are going to have to look at the same option as Barclays and close the pension scheme to existing members.”

Is that all or just those after 1987!?.