Royal Mail runs risk of fresh pension deficit

[TrueBlueTerrier]

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Royal Mail, the UK postal service operator, has been criticised for running the risk of building up a fresh pension deficit after its previous black hole was “magicked away” by the government.

Last year the UK government relieved Royal Mail of £38bn of pension liabilities and a £10bn deficit in preparation for its privatisation, scheduled to occur within the next 12 months.

However, the postal operator will still start life as a private company with pension liabilities of £2.5bn, similar to its mooted market capitalisation of £2bn- £3bn. With 112,000 active scheme members, these liabilities rose by £434m in the past year.

Royal Mail’s preliminary results, released last week, show the scheme has an accounting surplus of £825m. This has lead John Ralfe, an independent pension consultant, to argue that it should invest purely in assets such as index-linked gilts and long-dated corporate bonds, which should move in line with its liabilities.

Royal Mail Pensions Trustees Limited declined to reveal its asset allocation, but told FTfm: “Since the pension transfer, we are following a more diversified investment strategy than we have in the past.”

As a result, Mr Ralfe criticised Royal Mail for not “battening down the hatches”.

“They don’t seem to have learnt their lesson,” he said.

[UnhappyGremlin]

http://www.ft.com/cms/s/0/b753bdb8-c485 ... z2YKMHpBAc

Royal Mail, the UK postal service operator, has been criticised for running the risk of building up a fresh pension deficit after its previous black hole was “magicked away” by the government.

Last year the UK government relieved Royal Mail of £38bn of pension liabilities and a £10bn deficit in preparation for its privatisation, scheduled to occur within the next 12 months.

However, the postal operator will still start life as a private company with pension liabilities of £2.5bn, similar to its mooted market capitalisation of £2bn- £3bn. With 112,000 active scheme members, these liabilities rose by £434m in the past year.

Royal Mail’s preliminary results, released last week, show the scheme has an accounting surplus of £825m. This has lead John Ralfe, an independent pension consultant, to argue that it should invest purely in assets such as index-linked gilts and long-dated corporate bonds, which should move in line with its liabilities.

Royal Mail Pensions Trustees Limited declined to reveal its asset allocation, but told FTfm: “Since the pension transfer, we are following a more diversified investment strategy than we have in the past.”

As a result, Mr Ralfe criticised Royal Mail for not “battening down the hatches”.

“They don’t seem to have learnt their lesson,” he said.

It's not a shock They never do.
Add into that the fact they don't give a s**t about the staff, and that the pensions of senior management and more than likely the trustees are gold plated and totally protected, then there is no drive to protect us.