Royal Mail workers to vote on plans to reform pension scheme

Royal Mail workers to vote on plans to reform pension scheme”

Royal Mail shares led the FTSE 100 fallers on Friday as the company said it expects the overall cost of a new staff pensions plan to be fundable from its current £400m annual pension contribution.

Following extensive talks with unions - Unite/CMA and the Communications Workers Union (CWU) - the company said it is offering employees a choice between a defined benefit or contribution scheme that would be funded within its current £400mln annual pension contribution. The DB scheme would involve members' pension pots being credited with 19.6% of pensionable pay a year, including a 13.6% employer contribution and a 6% member contribution.

The defined benefit cash balance scheme would provide members with a guaranteed lump sum at retirement.

Royal Mail said that it will make improvements to its existing defined contribution plan from April 2018, proposing increasing its standard contribution by 1% in each tier up to a maximum of 10% from this point. Royal Mail would also contribute 2% for other member benefits, such as death in service and ill-health.

With the defined contribution scheme, contributions would also be 13.6%% of pensionable pay.

Workers at Royal Mail are to vote on proposals by the postal firm to reform its pension scheme as it attempts to avert the threat of strike action.

"Royal Mail believes that the risk to the company of the proposed defined benefit cash balance scheme would be materially lower than under the current Plan and is a manageable risk for us", Royal Mail said in a statement.

Unite said in an emailed statement that it would hold a ballot seeking the views of its 6,000 Royal Mail managers, starting next week and closing on August 7.

As of 09:18 BST, Royal Mail's share price had lost 0.83 percent to 407.60p, underperforming the broader United Kingdom market, with the benchmark FTSE 100 index now standing 0.08 percent lower at 7,407.73 points.

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