Royal Mail Pension Plan Up Rating of Pensions

[TrueBlueTerrier]

LTB 358/11 Royal Mail Pension Plan Up Rating of Pensions

Dear Colleague
Royal Mail Pension Plan – Up-rating of Pensions

We understand that all Pension Scheme members will soon receive a letter from the Chair of the Pension Scheme Trustee Board, advising that from April 2011, up-rating of pensions for Section A and B members (those who joined the Pension Scheme before April 1987) will now be in line with the Consumer Price Index (CPI), rather than the previously used Retail Price Index (RPI).
This change has come about as a direct result of new Government policy and over time it will significantly reduce the accrued pension rights of Section A and B Scheme members.


For Section C members (those who joined the Pension Scheme after April 1987) they are not affected because the Trust Deed of this section of the Scheme specifically refers to RPI as the measure for up-rating pensions each year.
This Government policy has recently been subject to widespread media coverage because it affects all public sector schemes, as well as other schemes outside of the public sector, as in our case, where the Trust Deed specifically states that pensions will be up-rated in line with the Government’s preferred measure.
In every previous year the Government has used RPI as the most accurate measure of inflation. By making the change to CPI, which is on average 0.75% lower than RPI, the Government will save hundreds of millions of pounds in public sector schemes at the direct expense of peoples’ accrued pension benefits.
It is important that members understand that the Royal Mail Pension Plan is not yet a public sector scheme. Although the Postal Services Bill will eventually see elements transfer to a public sector scheme, under the provision of the Bill those elements are ring fenced from all Government policy on public sector schemes.


The significance of this is that the Royal Mail Group had the option of proposing a change to Scheme Rules to avoid using CPI and therefore protect the value of all benefits for Section A and B Scheme members. The company have deliberately chosen not to do this.
The Union met with the Royal Mail Group shortly after the Government announcement was made and followed this up in writing. We stressed the impact a change to CPI would have on a significant number of our members and we asked the company to ensure it engaged in meaningful consultation before discussions with the Trustees of the Scheme. Unfortunately, it has emerged that the company chose to ignore this approach and told the Trustees, without any consultation, that they did not want to consider a change to the Scheme Rules. Royal Mail will no doubt try and argue that this is all down to the Government and that the Trustees are responsible for applying the Rules of the Scheme. This is disingenuous. It has come about as a result of Government policy and the Trustees must apply the rules of the scheme, but the fact remains the company did have an option to protect members’ benefits but chose to ignore this.
In the last couple of weeks the Union has met Royal Mail and the Trustees. We provided both with a series of documents ranging from 1971 through to 2009, which in our view clearly infer that when the Scheme was originally set up there was an understanding that RPI was the measure to be used going forward. We have argued that given that RPI has been used every year since the Scheme’s inception then this is custom and practice and therefore an implied term of contract. We have pressed the company, in the strongest terms, to agree to review the issue and change the Trust Deed if and when the Government remove Royal Mail’s financial burden by taking on responsibility for the pension deficit. The company have responded by offering further talks but saying that they believe they are in a difficult position.
To summarise, it is very important that Branches convey the issues raised in this LTB within the workplace.


The Union does not accept the company’s position and we believe there remains an opportunity to reverse this policy. We will vigorously pursue this matter in the following ways:-
· In direct talks with the company we will press for the policy to be reviewed and subsequently reversed in the event of the pension’s deficit being taken on by Government.


· We will raise the matter in our ongoing discussions with the Government on the pension implications of the Postal Services Bill.


· We will mount an immediate legal challenge on both the lack of meaningful consultation and custom and practice being an implied term of contract.


· We will campaign, within the TUC, for a wider Union response to change overall Government policy.
It can be seen from the aforementioned and also the changes being proposed under the Postal Services Bill that pensions remains a crucial and topical issue. The Union will soon be providing more detailed information on all these matters in a communication to members’ home addressed.
In the meantime please refer CWU members to the content of this LTB and the recent full page article in the Voice.


Any enquiries on the above should be addressed to the DGS (P).
Yours sincerely

Dave Ward Ray Ellis


Deputy General Secretary (P) Assistant Secretary

[Tr@cker1952]

We will campaign, within the TUC, for a wider Union response to change overall Government policy.

Dont hold your breath