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The trustees of the Post Office section of the Royal Mail Pension Plan (RMPP) are planning on converting their buy-in policy with Rothesay Life into a buyout policy.
In a letter, Communication Workers Union (CWU) assistant secretary, Andy Furley, detailed the trustees' plan to move from a group insurance policy to an individual pension policy.
The buy-in deal, agreed in 2017, was worth £453m and aimed to protect members and their benefits.
Furley added that the trustee had confirmed that the value of members’ benefits, and any increases due in the future, would not change as a result of the transfer between Rothesay Life policies.
The buyout would apply to members who were employed before 1 April 2008 and were members of the Post Office section of the defined benefit RMPP, which closed in March 2017, and to benefits built up between April 2012 and March 2017.
Commenting on the announcement, a RMPP trustee spokesperson said: “This is the next stage of the 2017 buy-in which provided for it to be converted to a buyout at a later stage.
"The transaction covers the majority of RMPP (Post Office section) members and so the Post Office section is not being wound-up at this time. We are not in a position to disclose the value of the transaction or the value of benefits."
The conversion to a buyout policy is expected to be implemented later this year.
An RMPP trustee letter to scheme members stated: “After careful consideration, and having received advice from its advisers, the trustee has decided the time is right to move to the next step of converting this bulk insurance policy into individual policies for each member.
“A key benefit of doing this is that it reduces the expenses of running the RMPP, which in turn helps to protect the value of the surplus.”
The scheme’s latest valuation report (31 March 2018) indicated a surplus of £24m, while a funding update on 31 March 2019 indicated a surplus of £28m.
The trustee recommended moving to the individual Rothesay Life policy because it was “necessary” to free up the scheme’s surplus.
A joint statement to members from CWU, the Post Office and Unite read: “We are fully committed to working with the trustee to provide clarity on these changes to the way your benefits are provided in the future.
“To this end, we will be meeting with the trustee in due course to review all feedback received from scheme members.”