UK roundup: Royal Mail Pension Plan, Aon Hewitt, Sun Chemical
UK - Parliament has approved a bill that will see the state shoulder the burden of Royal Mail's £8.4bn (€9.3bn) pension deficit, as legislation to privatise the institution gathers pace.
The Postal Services bill, officially announced in the Queen's Speech last year, will see the government create a new pension scheme, separating the Royal Mail Pension Plan (RMPP) from the company in an effort to make it more attractive to private investors.
Royal Mail would then be left with a smaller, fully funded scheme, while the government addressed any liabilities.
Additionally, the bill will allow for the mutualisation of the Post Office, as well as guaranteeing that 10% of shares in the Royal Mail will be held by its employees.
Business secretary Vince Cable said he was delighted the bill had moved through the Commons so swiftly.
It is now being debated in the House of Lords before it can pass into law.
Cable added: "On taking office, the government realised it had to move swiftly to tackle the challenges facing Royal Mail and the Post Office to ensure the future of the important services they both provide. We're absolutely determined to secure the future of these two proud institutions."
RMPP has seen its deficit steadily increase over the years, rising from £3.4bn to £10.3bn between 2006 and 2009. However, on the back of strong returns of 22% last year, it fell to £8.4bn.
The scheme had previously announced plans to increase deficit reduction payments from its current level of £282m a year to address the issue.
The size of the deficit, as well as the scheme's investment strategy, has been a cause for much debate, with critics branding it a hedge fund delivering letters due to a percieved overexposure to the futures market.
In other news, Aon Hewitt has been appointed pension administrator and actuarial consultant for the Sun Chemical Limited Pension Scheme.
Sun Chemical has closed the £250m scheme to new entrants, but still links any future accrual of its members to salary increases.
Stuart Heatley, managing director of benefits administration for the UK and EMEA at Aon Hewitt, said: "Given the frozen nature of the plan and their objectives in the future, the trustees were keen to explore new options to improve on their previous structure and to gain new efficiencies."