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Members of Royal Mail’s defined benefit pension scheme will be unable to earn future benefits through the scheme from the end of next March, the company announced today, becoming the latest large UK company to withdraw unsustainably generous retirement provisions.
The UK postal operator began a consultation about the future of the scheme in January, and said today that it would close the plan to future accrual as “there is no affordable solution to keeping the plan open in its current form”.
The future of the scheme is a delicate subject for Royal Mail, with the Communication Workers’ Union, which represents front-line staff at the company, previously threatening strike action over the issue.
The company said it has reviewed feedback from pension members and unions, including a proposal for a compromise pension arrangement by the CWU that would share some financial risks with workers.
Royal Mail said it will “continue to work closely with our unions on a sustainable and affordable solution for the provision of future pension benefits”.
Currently, Royal Mail contributes around £400m a year to the pension plan, but it said that could more than double to over £1bn next year if no changes are made.