Christine Buckley, Industrial Editor
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Royal Mail plans to close its final-salary pension scheme to all employees in a move that could plunge the business further into industrial turmoil.
The decision is expected to trigger strikes by thousands of postal managers, in addition to unrest among its 130,000 employees who are in dispute over pay and working arrangements.
Royal Mail is expected to write to employees soon to outline sweeping changes to the pension scheme, including raising the retirement age by five years.
Its move to close the final-salary scheme for existing employees, along with new ones, is almost unprecedented. Rentokil is one of the few other large organisations to take such drastic action. Usually companies that change pension schemes pull down the shutters on final-salary arrangements to new employees only.
The move to end the scheme comes days after Royal Mail denied that it had any such plans. Nevertheless, the proposals are believed to have been outlined to senior managers two weeks ago. The organisation will begin a two-month consultation on the plan soon.
In another controversial move, Royal Mail is to propose “banking” current benefits and linking them with RPI rather than salary levels. Unite, which represents 12,000 post managers, says that this change would cost pension scheme members £1.5 billion.
Paul Reuter, national officer for the union, said: “Even accounting for inflation, the £1.5 billion that the members could lose far exceeds the amount taken from Royal Mail by the great train robbers.
“We call upon Royal Mail to honour their commitment to preserve the past service benefits that have been built up and paid for by our members. We also call upon Adam Crozier [the chief executive] to honour his commitment given in February to safeguard final-salary schemes going forward. Failure by Royal Mail to respond positively will leave Unite with no option other than to ballot its members for strike action.”
Royal Mail is facing a wave of national strike action from the Communication Workers Union (CWU) in one of its most turbulent periods of industrial relations for many years. More than 130,000 CWU members are threatening to stage two 48-hour walkouts either side of a Monday next month, triggering five days of disruption because very little work is now done on Sundays. Unless Royal Mail backs down on the pension changes and improves a pay offer, the two national walkouts will be followed by continuous selective action across all operations in the postal network.
Unite is due to meet Royal Mail today, but it does not believe that the pension proposals will be changed. It is understood that the postal group will say that it wants to drop the final-salary scheme in favour of pensions calculated on career average earnings indexed to RPI and capped at 5 per cent from April next year.
In February Royal Mail announced the closure of the final-salary pension scheme to new employees. Then Mr Crozier said: “It is important we safeguard the future of the pension fund for our people, who regard a final-salary pension scheme as a key benefit of working for Royal Mail.”
The retirement age is to be lifted from 60, which is enjoyed by many public sector workers, to 65.
A spokesman for Royal Mail said that he could not comment on proposals before employees are informed.
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why are the media not informing the public of the REAL reason why we are on strike. in the Q and A section on the strike on this site it says we are on strike because we want a 27% pay increase over 5 years! this is totally wrong and is misinforming the public, who as they dont know the true reasons are beginning to go against their postmen and women
richard harrison, leeds,
The blame for this destruction of final salary schemes in the public and the private sectors lies firmly at the door of one Gordon Brown. As Chancellor he plundered the nation's pensions to the tune of £ 100 BILLION ! It seems that even that monstrous amount is insufficient to pay for all his spending follies. More and more working people out there are beginning to feel the effects of Brown's stealth taxes and they should register their anger at the ballot box.
One guarantee Labour can make and keep: they will not touch the pensions of the Civil Service or MPs.......
Rick, London, ?England
The Goverment are behind the Post Office Board 100 per cent,
they are the paymasters,Leighton/Crozier have just to do the dirty work.The first job is to break the Union,then the changes will come fast.The Post Office is much like the NHS something
the Goverment would rather not have,but for the moment they are stuck with it,but for how long?
Alan, Falkirk, Scotland
The pensions Royal Mail employees expect under their final salary scheme have not been paid for as Paul Reuter claims. The levels of contribution paid by the employees would fund far smaller pensions in the private sector. It seems that the unions would like tax payers to make up the difference as they do for public sector pensions, as there is no way Royal Mail can do this itself with its present profit level.
Stuart, Stafford,
It is disgusting that Royal Mail are treating its emplyees like this, the fact that in the past Royal Mail took a pensions contribution for several years goes unreported in the main. All this is going on whilst RM have as yet to release their financial reports, maybe they do not want to reveal how much of a bonus Allan Leighton and his cronies are to receive for robbing their employees.
Kevan Pugh, Colchester, Essex
Someone has to fund the obscene bonuses paid to the rather objectionable Chief Executive for cutting services. It will, of course, as usual, be the employees and the public who pay the price. Crozier will walk away from the mess he leaves as a very wealthy man.
Neil, Gloucestershire, England
there is only one man who can stop this!. gordon brown !!! the goverment own royal mail. the people who work for royal mail are being robbed by leighton and crozier so they can line thier own pockets with millions of pounds, pensions, jobs,being lost.post offices being closed. the promise of bogus shares. mr. brown get rid of these two now before we lose royal mail forever
d.anderson, GLASGOW,
Wake up and smell the coffee.
My company, Kingspan Ltd, closed their final salary scheme,to existing employees, over four years ago . It was replaced with a money purchase scheme, which with the current economic climate will fall well short on the governments recommended pension income at retirement. Why do you only comment on the large companies, as overall they represent only small numbers in the workplace. The small to meduim companinies can do almost what they like as in the eyes of the press are "anonomous" . If the goverment had kept their stickly little mitts off the pension system, there would be considerably less worker facing the prospect of absolute poverty on retirement, having to live on state handouts. Not all of us are lucky enough to work in the public sector, or ex public companies( TUPE), with excellent pension provisions.
Welcome to the real world.
Graham Waddell, Scarborough,
Despite Royal Mail's spokesman saying he couldn't comment on the proposals before employees are informed,the worforce have been informed.
These proposals are an Executive decision made by Royal Mail made without consultation from the workforce despite a Pension review being carried out and I believe yet to be concluded.
This is typical of the management of Royal Mail ,force through something despite what any review says or has not said or has not concluded without consulting the workforce.
Talk about harassment of employess,this is what the workforce has to face every day.
john, shrewsbury, uk
I paid into this pension scheme during the 80's and 90's when Royal Mail was a public service. But now the government (100% share holder in Royal mail PLC) need my pension to bail out the British economy. Expect more of this in the future as public services are drained to keep the private sector awash with cash. Gordon Brown must now take from the prudent to pay the reckless.
Andrew, Essex,
Yet again it is the British Working Class that has to suffer for the dealings of the idle rich. Having paid into this RM pension scheme for 22 years I'm now to be told that my 'improved' benefits when I retire will cut. Cut by managers who have been excluded from these cuts to their pension schemes. Mr Leighton only 'works' for the Royal Mail between one and three days a week and has been in the job for less than 5 years yet his pension benefits from Royal Mail currently far surpass what I will get in 20 years time and it's my pension that has to be cut by 40%! I'm also told by Leighton that I am 25% owver paid and 40% less efficient than employees in competing companies!! what cometition? who else delivers mail to every UK address, 6 days a week? TNT, DX, any of them? I don't think so. it is workers in these so called competitors that are underpaid - they should be brought up to the standards set by the market leader - Royal Mail.
Tony , Stockport, UK
I've worked for Royal Mail for 20 yrs,if I retire at 65 I will miss out on £40,000 worth of pension!It's ok if your Crozier or Leighton and get a massive bonus that makes you a millionaire,you need't worry about retirement.
Leighton says in his latest book -you must listen to what the workforce say-rubbish he's completely ignored the workforce of Royal Mail.
He should listen to workforce now-he should resign immediately along with his mate Crozier.
john, shrewsbury, uk
I stand to lose over 20% of my pension and yet Royal Mail continue to attempt to deliberately mislead us. The business took a fifteen year pension holiday and now expects me to work 5 years longer and also have to increase my contributions. I dont think so. Strangely, senior managers pensions are unnafected. It seems the fat cats continue to cream off the real workers?
Ryan Ward, Romford, Essex
As an employee of 32 years service to royal mail there plan to close final salary pensions to ALL employees is draconian and a real slap on the face to loyal long standing employees
steven edens, newtownabbey, Co Antrim