UK - Royal Mail has confirmed its pension deficit in accounting terms has increased by more than £1bn (€1.26bn) between March and September 2008, to reach £4.04bn.
Figures from the company's trading update for the six months ending 28 September 2008 showed despite controversial pension reforms implemented earlier this year, (See earlier IPE article: Unions urge rejection of Royal Mail deal), "heavy falls in the stock market" increased the deficit from £2.92bn to over £4bn.
In addition, the statement admitted the actuarial deficit - scheduled for its next valuation at 31 March 2009 - is of "particular concern", as Royal Mail said "it is likely to have increased substantially from the previous level of £3.4bn in March 2006".
The figures also revealed regular pension contributions to the scheme by the group had increased by 4.1%, or £11m, year-on-year as a result of increased pay costs, although the rate of employer contributions to the Royal Mail Pension Plan remained at 20%.
Although the actuarial deficit is still unclear, Royal Mail confirmed it contributed an additional £284m to the pension scheme in 2007/08 and that it will continue to pay an "an average of over £260m per annum for the 15 years from 31 March 2008", in an effort to clear the billion pound deficit.
The Communication Workers' Union (CWU) threatened Royal Mail with a series of strike actions in June if it refused to back down on the changes to the £23bn defined benefit (DB) pension scheme, which include plans to raise the normal retirement age to 65 and to place new employees in a defined contribution (DC) scheme. (See earlier IPE article: Royal Mail given "last chance" to avoid strike threat)
If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com
No comments yet