13 Apr 2017 07:00
13 April 2017
Royal Mail plc
UPDATE ON ROYAL MAIL'S 2018 PENSION REVIEW
Royal Mail plc (RMG.L) is today providing an update on its 2018 Pension Review in respect of the future of the Royal Mail Pension Plan (the Plan).
The member-wide consultation phase ended on 10 March 2017. Royal Mail has reviewed the consultation feedback received from members and its unions, the Communication Workers Union (CWU) and Unite/CMA. This includes a proposal put forward by the CWU. Sustainability, affordability and security are the principles the Company employed when reviewing the consultation feedback.
The Plan is currently in surplus but we expect the surplus will run out in 2018. The Company's annual pension contributions are currently around £400 million. If no changes are made, the contributions could more than double to over £1 billion in 2018. We have concluded that there is no affordable solution to keeping the Plan open in its current form. Therefore, the Company has come to the decision that the Plan will close to future accrual on 31 March 2018, subject to Trustee approval.
We know how important pension benefits are to our colleagues. We continue to work closely with our unions on a sustainable and affordable solution for the provision of future pension benefits. We will write to Plan members once further decisions have been made.
ENDS
Investor Relations:
Catherine Nash
Phone: +44(0)20 7449 8183
Email: investorrelations@royalmail.com
Media enquiries:
Andrew Moys
Phone: +44 (0)7841 803 321
Email: Andrew.moys@royalmail.com
Peter Tilley
Phone: +44 (0)7841 803 316
Email: peter.tilley@royalmail.com
Royal Mail press office out of hours: 020 3338 1007
Notes:
1. At around £400 million per year, Royal Mail currently makes one of the UK's largest cash contributions in ongoing pension contributions. Many companies have already closed their Defined Benefit pension schemes. Only a few FTSE 100 companies, like Royal Mail, have a significant number of their employees still building up benefits in a Defined Benefit pension scheme.
2. Plan members' benefits built up until April 2012 are backed by Government. Benefits built up between 2012 and 2018 are backed by the Plan's assets. Members can get these benefits when they come to take their pensions.
Royal Mail Statutory Pension Scheme (backed by Government) | Royal Mail Pension Plan (backed by the Plan's assets, and by Royal Mail) |
Defined Benefit benefits earned up until 31 March 2012. Increased in line with RPI (up to 5% a year) until a member takes them or leaves Royal Mail employment. | Defined Benefit benefits earned between 1 April 2012 and 31 March 2018. Increased in line with RPI (up to 5% a year) until a member takes them or leaves Royal Mail employment. |
3. The Company is committed to working hard to find a solution which enables it to continue providing sustainable, good quality pension benefits, a healthy Company, and as many high quality jobs as possible.