Royal Mail heads for clash with Labour
ROYAL Mail increased pressure on the government to quickly pass a bill to part-privatise the postal operator, warning that closing final-salary pension schemes for 150,000 staff will be at the top of its “options list” if no deal takes place.
The threat comes amid frustration that the political process to get the privatisation through Parliament has been delayed, increasing fears it may be put off until after the summer recess.Last night it emerged that Gordon Brown was planning to put privatisation firmly on the back burner, given its unpopularity with many Labour party members and the unions.
The Royal Mail pension threat was issued by group chairman Donald Brydon yesterday. He said the group will have to look at the same option as Barclays bank, which last week closed its scheme to existing members.
At Royal Mail the final-salary scheme is based on a worker’s average pay throughout their career. Unionised staff at the firm are likely to go on strike if their pensions are threatened.
Brydon told The Times yesterday: “I don’t think they would be pleased, but this is reality. The government will not bail out the pension fund and employees if the bill is not passed.”
He said he has little choice but to consider cutting the pensions as the pension fund deficit could be more than £10bn – the final number will be revealed when the group unveils its triennial review this summer.
Royal Mail would have to double its £500m-a-year payments into the fund to ensure it can maintain future pension payouts.
Last week oil major BP and supermarket chain WM Morrison also reduced their future pension liabilities as the financial crisis has left firms having to dig deep to maintain future pension obligations to staff.
CVC Partners, the private-equity group that has put a £2bn bid on the table, is keen to see a second reading of the bill take place.