Serpent's Egg

The Eroticism of Fat Men

Royal Mail to close pension scheme due to ‘unaffordable’ ballooning costs. (Why are they spending money on ballooning? Is that why post is so slow these days?)

The move raises the possibility of strike action
The move raises the possibility of strike action CREDIT: ANDREW MILLIGAN/PA WIRE

Royal Mail will close its final salary pension scheme next year as it faces costs ballooning to more than £1bn a year.

The company has said it cannot afford to keep the pension plan open, and will close it at the end of March 2018.

The decision, which will affect around 90,000 workers, follows a consultation process that ended last month.

It also raises the prospect of strike action, which was threatened last year by the Communication Workers’ Union if postal workers’ pensions were cut.

The company has said it cannot afford to keep the pension plan open
The company has said it cannot afford to keep the pension plan open CREDIT: CARL COURT/GETTY IMAGES

“The plan is currently in surplus but we expect the surplus will run out in 2018,” Royal Mail said.

“The company’s annual pension contributions are currently around £400m. If no changes are made, the contributions could more than double to over £1bn in 2018.

“We have concluded that there is no affordable solution to keep the plan open in its current form. Therefore, the company has come to the decision that the plan will close to future accrual on 31 March 2018, subject to trustee approval.”

Royal Mail said in January that it could not afford an increase to the annual £400m it currently contributes to the plan, saying it is significantly more than the annual cash it generates, which was around £290m in the last financial year.

In closing the scheme, Royal Mail joins the likes of fellow British companies Tesco and Marks & Spencer, which made similar moves last year.

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This entry was posted on April 14, 2017 by and tagged .

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