Royal Mail pension deficit ‘could top £12bn’

Plans to partially privatise Royal Mail have come under increased pressure again following reports that the mail operator’s much-publicised pension deficit could be as much as double the previous £6bn estimate.

Plans to partially privatise Royal Mail have come under increased pressure again following reports that the mail operator’s much-publicised pension deficit could be as much as double the previous £6bn estimate.

The deficit could end up being nearer £12bn, resulting in a greater cost to the taxpayer, according to reports in The Telegraph.

It stated that an independent pensions consultant, John Ralph, said the Treasury “is in painful denial” over the situation, claiming the government’s strategy is “to push today’s problems into the future”.

The newspaper also says that interest from TNT, one of the main suitors for Royal Mail, has been reined in once again.

With a 30% offer falling short of the government’s £3bn estimate, TNT has also voiced concern about dealing with workers’ unions and the ability to cut jobs if they take control.

In addition, investors in TNT have warned against a 30% stake in Royal Mail, fearing it would give the company neither enough control nor equally, a suitable exit strategy, according to the Financial Times.

The company concerns arise as profits within TNT dropped by more than 50% in the first quarter of 2009 with 11,000 jobs in the Netherlands expected to be shed.