Royal Mail pension costs set to triple

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The costs of maintaining Royal Mail’s defined benefit pension scheme after next year would be even higher than the company had previously estimated, it said today, as it attempts to convince staff to accept a new agreement without provoking strike action.

In an update on Monday, Royal Mail said its latest valuation of the pension plan showed the annual cost of funding the plan would be £1.3bn, compared to current annual contributions of £400m.

The company had previously estimated that the cost of maintaining its scheme could grow to over £1bn a year, and said last month that it would close the “unaffordable” scheme at the end of this financial year.

The decision has raised the prospect of the UK’s first national postal strike since Royal Mail was privatised four years ago. The Communication Workers’ Union last month rejected a new pension offer from Royal Mail, and has vowed to ballot for strike action if the company attempts to impose its plans.

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