Royal Mail's pension fund is another Pounds 1bn in the red

ROYAL MAIL will reveal this week that its pension-fund deficit has swollen from Pounds 4.4billion to Pounds 5.5billion, a figure that will put further pressure on the government to pump extra money into the group.

The huge rise in the deficit, which has resulted from an

actuarial review on mortality rates, will accompany full-year results that will show profits rising to Pounds 600m.

To address the bigger hole in the pension fund, Royal Mail will have to increase its annual contribution from Pounds 600m to Pounds 800m. Allan Leighton, Royal Mail’s chairman, is due to meet Alistair Darling, the new trade and industry secretary, early this week to allay any concerns the government may have in funding a Pounds 2billion rights issue.

Because Darling is new to the post he may agree in principle to support the fundraising but ask for more time to analyse the detail. The cash injection has to be described as a rights issue

to avoid accusations of state aid.