UK unions warn of industrial action over Royal Mail pension closure

UK unions representing postal workers said they could take industrial action against Royal Mail's decision to shut its final salary pension scheme next March.

The Communication Workers Union (CWU) and Unite both warned of potential strike action after the company said it needed to close the scheme, claiming there was “no affordable solution to keeping the plan open in its current form”.

The CWU said Royal Mail, privatised in 2013, planned to put all members into "inferior money purchase alternatives", adding that employees faced losing up to a third of their future pensions.

"For a 50 year old Section C member earning £25,000 a year and retiring at 65, this would equate to a loss of £4,392 a year (£109,800 over 25 years)," the CWU said in a statement.

CWU acting deputy general secretary Ray Ellis said Royal Mail had decided to ignore the views of its workforce despite a consultation revealing "massive opposition" to the closure plan.

Ellis said the union had "made clear that any attempt by the company to impose change without agreement will be met with the strongest possible opposition including a ballot for industrial action".

"We will not stand by and watch the company abandon the pension promises it made at the time of privatisation which threatens our members with massive cuts to their future pension benefits and insecurity and poverty in retirement,” he said.

Earlier on Thursday Royal Mail had said it currently contributed £400m a year to the scheme but this could more than double to £1bn in 2018. The fund's surplus was expected to run out next year, it added.

The CWU put forward a hybrid proposal that shared the risk between company and employees after Royal Mail announced in January that it want to shut the current scheme.

Brian Scott, who represents Royal Mail's Unite members, said the key discussions with the company would centre around any replacement scheme.

“The Royal Mail Pension Plan (RMPP) is not closing in its entirety as the replacement pension scheme will embrace part of that. It is very likely that it will still be a different form of the current defined benefit scheme," he said.

“We will study the implications of today’s announcement very carefully and consider all the options going forward. If we don’t achieve a satisfactory outcome, we can't rule out an industrial action ballot on this issue."