UK - Royal Mail Group, the state-owned UK postal service, has revealed the deficit on its £20bn (€22.3bn) pension scheme has more than doubled over the year to £6.77bn by the end of March 2009.
Latest figures from Royal Mail's annual report for 2008-09 showed the pension deficit increased by £3.85bn from £2.92bn in March 2008, primarily as a result of "lower than expected asset values".
However, while the deficit more than doubled in the financial statements, the company warned the results of the latest actuarial valuation, expected later this year, is "also likely to have increased significantly" from the £3.4bn deficit recorded in 2006.
The growing deficit was revealed by the company as the Postal Services Bill, which will see the government take on the historic liabilities of the Royal Mail Pension Plan (RMPP), continues to make its way through Parliament. (See earlier IPE article: Gov't admits it will not leave RMPP fully funded)
Figures showed actual pension costs for the scheme did reduce over the year by 29.2% from £701m to £496m following the recent pension reforms, which included closing the scheme to new members. (See earlier IPE article: Royal Mail Pension may become new public scheme)
Meanwhile, it noted regular employer contributions increased slightly from £550m to £551m, while deficit recovery contributions to its pension schemes rose by £6m to £290m, of which £285m related to the RMPP.
The results statement also showed the value of the pension fund assets dropped from £23.9bn at the end of March 2008 to £20.1bn a year later, while the value of the liabilities remained steady at £26.8bn.
Adam Crozier, chief executive of Royal Mail, said: "Critical to our success is working with the government to resolve issues identified in the Hooper review of the industry - the need for fairer regulation, the growing legacy pension deficit, and timely and flexible access to capital. We are working with the government on a package of measures which will help secure a successful future for Royal Mail."
He claimed there is an "urgent need to tackle the escalating legacy pension fund deficit so that the financial benefits of modernisation and greater efficiency can flow through to our customers in the form of better services rather than being absorbed by unsustainable payments into a volatile fund".
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