Royal Mail workers back CWU's 'call to arms' over DB closure

04 Oct 2017, 15:45 ... db-closure

Royal Mail workers have overwhelmingly voted for strike action in response to the company's planned closure of its defined benefit (DB) scheme.

Almost three-quarters of the 110,000 Royal Mail members represented by the Communication Workers Union (CWU) voted in the strike ballot, with 89% of those voting in favour of industrial action.

The dispute relates to planned changes to pension provision and wider employment concerns, such as job security and the postal service's future.

The company is planning to close the career average Royal Mail Pension Plan (RMPP) to future accrual next April, when it otherwise expects contributions to surge from 17% to 50% of pensionable pay, swallowing the scheme's £1.1bn surplus recorded in its 2015 valuation.

In its place, the company hopes to set up a ‘cash balance' scheme, in which members would be guaranteed a lump sum on retirement, based on contributions of 19.6%, with potential increases depending on investment performance.

However, the CWU has rejected the plans and said the ballot result represented a "massive vote of no confidence" in the company, and a backing of the union's "call to arms".

CWU deputy general secretary for postal Terry Pullinger called for Royal Mail managers to resign or be sacked.

"This ballot result is hugely significant and demonstrates a strength of feeling that can only be translated as a massive vote of no confidence in the managerial leadership of the Royal Mail Group and the direction that they advocate," he said.

"Any sense of vocational spirit and working together with management has been lost in a climate of fear and insecurity. This massive failure in trust has created a breakdown in relationships and a toxic environment where working together to solve difficult problems has become almost impossible. The managerial leadership has failed and should resign or be sacked.

"This is a dispute about honour and we refuse to simply stand aside."

The result does not necessarily mean industrial action will happen, with the CWU's postal executive expected to confirm next steps later this week.

In a statement, Royal Mail said it was "very disappointed" in the ballot result, and added strike action was only supported by 57% of staff when taking into account those who did not vote or who are not union members.

"Industrial action is damaging for our business. It undermines the trust of our customers. It makes it harder to pay for the great terms and conditions we provide for our employees. National industrial action means the current offer from Royal Mail, including on pensions, will be taken off the table."

The company's cash balance proposal countered the CWU's suggestion of a "compromise" risk-sharing scheme, where DB and defined contribution members would merge into a single scheme, which then guarantees a minimum wage in retirement. This could be uplifted with inflation depending on investment performance.

Hargreaves Lansdown senior analyst Nathan Long said both proposals could provide a "first-class retirement".

"Royal Mail's decision to close its DB pension scheme is entirely in keeping with many employers keen to cap the uncertainty of future pension payments," he said. "Delivering on these changes is proving more challenging, with the threat of industrial action now hanging over the busy Christmas period.

"Two replacement schemes have been tabled. Both offer generous pension contributions in comparison to most employers. While the pension benefits are undoubtedly being water down, a first-class retirement is still available for staff who maintain membership throughout their working life."

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