PostNL seeks pension reform to counter €500m deficit

PostNL said today it must find a way to cut its pension contributions, with turbulence in the financial markets opening up a EUR 500m black hole in its pension fund. The Dutch postal service is opening talks with its pension investment funds today in the hopes that changes can be made to the “untenable” situation within the pension programme. It will also seek reforms when it begins its next round of collective bargaining with trade unions in the first quarter of 2012.

Low interest rates and stock market volatility has “severely impacted” investments within PostNL’s largest pension fund, it said, leaving it with just 96% coverage this autumn.

PostNL already pays a regular premium contribution of about 35% to the pension fund for the average employee, which it states is “unusual” compared to the norm for businesses in the Netherlands, who generally contribute around 20-25%.

But without changes, contributions may have to increase by hundreds of millions of euros to restore the deficit in the fund, which under current law must be tackled within three years.

PostNL CEO Harry Koorstra (pictured right) noted the “unfortunate” timing of the negotiations, but insisted they were now “unavoidable”.

“PostNL will enter into a dialogue with the pension funds and the trade unions to discuss changes to the pension arrangements,” he said today.

“The current arrangements put too much financial pressure on the company. Clearly, we want a good, sustainable pension arrangement for our employees. However, this must be more in line with the realities of today.”

Under pressure

Along with the pension troubles, PostNL has been suffering significantly from its 29.9% stake in express carrier TNT Express, which it said today has put its financial position “under pressure”.

The company said it has decided not to pay a cash dividend “for the time being”. Investment needed for future growth and diversification has also been delayed.

PostNL said the negotiations with pension funds underway from today would seek to find arrangements where costs are more manageable. The company is informing trade unions today about the situation with the pension funds, and will discuss proposals to adjust arrangements when labour contract talks open early in 2012.

The postal service suggested it could demand that its employees start paying personal premium contributions into the pension fund.

Unions

Dutch trade union Abvakabo FNV said today that employees should be spared from having to bail out PostNL, since they already have to face the hardships of a major restructuring at PostNL. As it seeks to streamline its network, the postal service has plans to shut down 300 delivery offices from next year until mid-2013, as it seeks to redesign its logistics system with a more centralised approach.

“Certainly the employees who lose their jobs in the coming period should be kept out of the storm,” said the union’s director, Martin Sander, who said that problems with the pension plan were “temporary”, and that therefore suitable workarounds could be found.

“Some of the problems have not been caused by PostNL,” Sanders said, “but the choice to split PostNL and TNT Express was the choice of PostNL, not its employees. TNT’s share has fallen dramatically, and therefore much of the value that PostNL has had to write off is not due to the employees of PostNL.”

Inge Bakker, director at another union CNV Publieke Zaak, said the union was willing to listen to proposals, but was “very concerned about the message of the postal service”.

Since 2006, PostNL has already reduced its 77,000 strong work force by around 5,500.

“In these proposals, PostNL will take as much into account as possible of the consequences for employees affected by the current reorganisations,” said PostNL today regarding its talks with the unions.