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Unions urge rejection of Royal Mail deal

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  • Unions urge rejection of Royal Mail deal

UK - Royal Mail could face further strike action over pension reforms, after unions claimed the results of a consultation were a "sham" and urged members to reject the new proposals.

The outcome of the pension consultation, which started in November, has resulted in a few changes to the original proposals, including a delay in the closure of the defined benefit scheme to new members to March 31 2008, instead of January 31 2008.

In addition, all pension benefits earned before April 1 will be protected and linked to final salary, however after this date all future accruals will be calculated on a career average.

Under proposed reforms, the £23bn (€30bn) scheme will continue with plans to increase the normal retirement age to 65, but this will take place from April 2010 instead of 2008, and members will still be able to retire at 60 with an early payment reduction on benefits built up after the 2010 deadline.

Royal Mail has also confirmed they will launch a new defined contribution scheme in April 2009, which new employees joining the company after March 31 2008 will be able to join once they have been employed a year.

Jon Millidge, interim HR director at Royal Mail, said increasing longevity and higher costs had forced the firm to implement pension reforms, as it is currently making annual payments of £850m to the scheme in order to cover both ongoing contributions and the pension deficit.

"Even if the fund had not been in deficit, Royal Mail would still have faced making changes to the pension plan. These changes have only been decided after very lengthy discussions with the unions," said Millidge.

However, both Unite the Union and the Communication Workers Union (CWU) have criticised the results of the consultation as they claim the proposals remain the same as those first announced in April 2007.

The CWU said the Royal Mail had "turned a blind-eye to suggestions by all parties and plan to plough ahead with their pre-planned agenda regardless of viable alternatives and the wishes of their staff".

As a result, it said it was "disappointed with the lack of democratic participation and transparency" in the consultation and is recommending that members reject the proposed changes.

Paul Reuter, national secretary of Unite, added: "Royal Mail is asking for too much too soon. Its consultation has been a complete sham. We have no option but to recommend that our members reject Royal Mail's pension plan."

He urged Royal Mail to "take a more reasonable approach" to the issues of retirement age and future pensions provision, and warned "in the event that our members reject the pension plan we cannot rule out industrial action".

However, Millidge claimed the organisation has "signed, written agreements" with both unions that include support for the pension reform, which he said Royal Mail "fully expects them to honour".

The Unite ballot will close on March 14, and the results will be announced on March 18, while the ballot of CWU members will be open between March 10 and 25 and the result will be confirmed on March 26. These findings will decide whether further strike action is needed, according to the unions.

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.

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