Royal Mail and trustees ‘agree recovery plan’
UK – Royal Mail and its pension trustees have agreed a recovery plan, which could see the group pump more than £12bn (€17.5bn) into its pension scheme over the next 17 years, say reports.
This is in a bid to meet its pension promises and plug a £5.6bn deficit, according to an unsourced report in the Daily Telegraph.
According to Royal Mail’s annual results, it planned to put some £500m towards contributions and £250m towards its deficit from 2007.
This is a £270m increase on the amount contributed by Royal Mail last year – pegged at £480m, of which £340 was spent on pension contributions and £140m was used towards cancelling out the deficit.
A Royal Mail spokesperson told IPE that the proposed £750m was a “ballpark figure”.
While The Pensions Regulator could not comment specifically on whether the Royal Mail agreement was likely to be rubber stamped, a spokesperson said: “The 10-year period is a trigger. Anything over that, the Regulator may choose to look at the recovery plan in greater depth.”
However, the £850m deal - part of a £3bn funding package agreed in principle with government earlier in the year – could act in Royal Mail’s favour, said the Telegraph.
Royal Mail added that it was “not in a position to make a statement” as to whether this reported deal was accurate or when a final decision between the group and trustees would be announced publicly.
Questions have also been raised in the media as to how Royal Mail plans to fund its recovery plan, especially since the publicly owned outfit brought in just £355m in operating profits last year. There is also speculation that the group could cut costs and jobs to meet its agreement.