Postmen hit as Royal Mail mulls axe for pensions

Royal Mail rang the death knell for one of the UK’s last surviving major final salary pension schemes today, threatening the retirements of 90,000 postal workers.

Royal Mail, privatised in 2013 at 330p a share in a highly controversial float, today said it has started a “consultation process” with staff and unions over changes to pensions.

The move won’t affect those who have already retired, or directors such as £1.5 million-a-year chief executive Moya Greene, who are not in the scheme.

The Royal Mail’s giant fund has assets of £7.4 billion and, unlike many other schemes, is presently in surplus to the tune of £1.8 billion.

It says that surplus will run out in 2018 and that it would have to pay in £1 billion a year, up from £400 million now, to keep running the fund, which it last year labelled “simply unaffordable”.

Though the company insists no decision has yet been taken, it seems highly unlikely that the final-salary scheme will be retained.

The average pay at Royal Mail for so-called frontline staff is £23,000. It pays £200,000 a year into Greene’s pension.

A spokesman said: “We will actively consider any other affordable proposals that members or their representatives put forward during the consultation.” The consultation ends in March.

The announcement, so soon after the key Christmas period, is likely to spark anger. By shifting from a final-salary pension to a so-called “defined contribution” scheme, staff are left at the mercy of the stock market for their retirement income.

Unite, already at war with the Post Office over changes to pensions, said it could not rule out strike action.