Two postal workers’ unions have threatened strike action after Royal Mail confirmed plans to close its defined benefit (DB) pension scheme.
The Communication Workers’ Union (CWU) and Unite the Union have condemned the decision to close the scheme in March 2018.
The company has blamed rising costs for the move saying that it will have to pay £1bn into the scheme next year, up from the £400m it is currently paying.
Royal Mail said there is no affordable option to keeping the scheme open in its current form.
CWU claims that the scheme’s 90,000 members could lose up to a third of their benefits in retirement based on Royal Mail’s plan to transfer them into a defined contribution (DC) scheme.
Under the plans a 50-year-old member, earning £25,000, would lose £4,392 a year if they retired a 65.
The CWU’s acting deputy general secretary (postal), Ray Ellis, pointed out that Royal Mail is ignoring the views of its workforce by proceeding with closing the scheme without consent.
“CWU has made clear that any attempt by the company to impose change without agreement will be met with the strongest possible opposition including a ballot for industrial action,” he added.
“We will not stand by and watch the company abandon the pension promises it made at the time of privatisation which threatens our members with massive cuts to their future pension benefits and insecurity and poverty in retirement.”
Unite’s officer for the Royal Mail, Brian Scott, described news of the planned closure as a “serious concern for a hardworking and dedicated workforce.”
He also refused to rule out strike action. “We will study the implications of today’s announcement very carefully and consider all the options going forward.
“If we don’t achieve a satisfactory outcome, we can’t rule out an industrial action ballot on this issue,” he added.
Unite will be speaking to its members in the coming weeks.
In response, CWU proposed an alternative plan for a Wage in Retirement Scheme.
Ellis warned the company to think again. “Instead of provoking a dispute by acting without agreement and closing the scheme without consent, we urge Royal Mail to withdraw its plans and enter into serious talks with the CWU to introduce our new WINRS scheme to guarantee all its employees a decent wage and security in retirement.”
News of the closure comes despite the Post Office part of the Royal Mail Pension Scheme having a £38.9m surplus. Assets for that part of the scheme stood at £402.3m on 31 March, while it had £381.4m of liabilities. However, this surplus is shrinking having stood at £62.7m at the end of March 2015 and is expected to disappear next year.
