UK - The UK government has revealed it is planning to relieve Royal Mail of its legacy pension deficit by March 2012.

The government wants to provide state aid to the Royal Mail Pension Plan (RMPP), which is currently facing a deficit of £8.4bn (€9.4bn).

The action will be launched only if the government gets approval from the European Commission.

Speaking in the House of Lords, Baroness Wilcox, the Department for Business, Innovation and Skills' representative in the UK's upper chamber, said: "I believe that all noble Lords will agree that the sooner the company is relieved of the crippling burden of its £8.4 billion pension deficit, the better it will be for the company and for the pension plan members."

She added: "For this reason, it is the Government's intention, subject to state aid approval, to relieve Royal Mail of its legacy pension deficit with effect from March 2012."

In October last year, the government announced it would reduce the pension plan's size by at least two-thirds and partially or fully privatise Royal Mail.  

The RMPP's assets are estimated at around £26bn, while its liabilities stand at £34.4bn.

The government said it would take responsibility for most of the pension scheme's liabilities. 

In a policy document presented to parliament in October, business secretary Vince Cable said: "Royal Mail is in a difficult position - there is no hiding from the facts: mail volumes falling, a multi-billion pound pension deficit, less efficiency than its competitors and an urgent need for more capital at a time when there are huge constraints on the public purse."

In July the same year, the trustees of RMPP reached an agreement with Royal Mail on completion of the scheme's financial health check.

The agreement aimed to increase contributions from employees to reduce the deficit.