CWU – Fight Back Over Royal Mail Pension
Following a meeting with senior field officials, the Communication Workers Union is to begin a campaign on the 5th May to highlight what it sees as government and Royal Mail policy failures and the effect that these policies have had on postal worker pensions.
The pension fund currenly has a deficit of around GBP 3.4bn, and Royal Mail plans to clear the deficit by paying into the fund over a period of up to 17 years as well as paying in an extra GBP 270 million this year, an amount it says, that will increase with inflation each year.
The normal retirement age is to be extended from age 60 to 65 with effect from 1 April 2010, pension calculations have now shifted from a Final Salary to a Career Salary Defined Benefit arrangement as of 1st April 2008, meaning that only pension earned in respect of service from 1 April 2008 would be affected by the change. Pension earned prior to this date will still be linked to final pensionable pay on the date the employee leaves or retires. The existing Pension Plan was closed to new members on 31 March 2008.
Two union ballots, one of Royal Mail managers conducted by the union 'Unite' and a subsequent ballot of workers, held by the CWU in March, showed an overwhelming rejection of the changes to pensions.
Although both the CWU and CMA/Unite had agreed that changes were needed, the CWU maintains that Royal Mail brought in the revised pension without final discussion with the union and employees and that Royal Mail had not fully explored a options put forward by the union. It now plans to put pressure on government to reverse changes to pensions by writing to and speaking with MPs and political bodies.
Royal Mail said that the changes were essential to secure the future of the pension for members and that a 60 day formal consultation which ran from 4 November 2007 to the 16th January 2008 enabled all Royal Mail employees to voice their concerns. Some 35,000 had responded. Royal Mail said that the final decison was aimed at protecting as much of the pension as possible and that it had informed the Pension Trustees that it would repay the shortfall of GB billion from it's own income over the 17 years.
Union members have criticised government for allowing Royal Mail to take a contribution holiday in the 1990s, but Royal Mail said that even if it hadn't taken a holiday, the Pension Plan would have been in surplus to the extent that due to an Inland Revenue rule, it meant that extra tax would be charged if the Plan’s assets continued to be valued at significantly more than its liabilities. Royal Mail said that this would have meant a lot of the extra money would have gone straight through the Plan to the Government in the form of extra tax and there would have been no benefit to the members at all. It also said that even if Royal Mail did not have a deficit, the Company would still be paying more for pensions than its competitors.
Royal Mail said that the pension deficit had increased due to people living longer which had significantly increased the value put on pension fund liabilities, that a lower predicted long-term investment return meant less will be earned by pension funds in the future than expected, and that recent changes in pension laws mean pensions now cost more to provide. It also said that if it had closed the Plan to new entrants but retained the existing benefits, members' contributions would have been at least 15% of pensionable pay which would have been unacceptable. It recognised that the changes would not be popular but that they were essential to protect the pension both now and in the future and that members' contributions would not go up as a result of the change and those already receiving a pension would be unaffected.
The CWU is to press ahead by lobbying MPs and the Postal Executive will meet on the 7th May to consider Phase 2 of the campaign. It is understood that the CWU is working with Unite with a view to developing a joint strategy. Neither union has ruled out strike action.
