Royal Mail pension may become new public scheme
UK - The Postal Services Bill published this week by the UK government includes provisions for the secretary of state for business and enterprise (BERR) to establish a "new public scheme" into which members of the Royal Mail Pension Plan (RMPP) could be transferred into.
Details of the Bill, published after the first reading by Lord Mandelson in the House of Lords, provide the secretary of state for BERR with the powers to establish a new pension plan which can be treated as an occupational pension scheme, to provide for "pensions or other benefits to be payable to or in respect of persons who are or have been qualifying members of the RMPP".
The Bill also offers the ability for the new scheme to increase payments in respect of qualifying accrued rights, in particular circumstances, as well as include provision relating to active members which is different to rights for deferred members, and could also allow for the payment of transfer values.
Other details relating to the potential future of the pension scheme - once the government takes responsibility for the deficit - include the plan being a "salary-related contracted-out scheme", while the secretary of state, currently Lord Mandelson, could also have the power to divide the RMPP into different sections, though this would also require it to allocate the existing assets, liabilities and obligations to the different sections of the fund.
Alternatively, the Bill could allow the secretary of state to amend the existing RMPP in relation to any of the potential changes, such as splitting the plan into different sections, rather than establishing a new scheme.
The proposed legislation also makes it clear that when "exercising the powers" outlined in the Bill, the secretary of state "must ensure" that the relevant pension provision for each member is "in all material respects, at least as good immediately after the exercise of the power as it is immediately before".
The government would also need to ensure that in transferring the assets from the Royal Mail pension to a new scheme the ratio of assets to liabilities "is at least equal" to the ratio in the existing scheme before the transfer.
However, the Bill confirmed the BERR secretary is required to "consult the trustee of the RMPP" before making an order to establish a new public scheme, or transfer the assets across, and the business minister must also have the consent of the Treasury before exercising the new powers.
The second reading of the Bill and the first debate on the legislation is scheduled for 10 March 2009 where it is likely to face strong opposition from both government backbenchers and opposition parties.
As although there is general agreement on the measures relating to the future of the pension fund, many MPs and the trade unions are angered by other measures in the Bill which will allow for a "strategic investor" to hold a 30% stake in the company, with over 160 MPs including many Labour Party members signing an early day motion opposing the plan. (See earlier IPE article: Royal Mail trustees back Hooper measures)
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