Post Office insists staff pensions are not at risk

THE Post Office yesterday lambasted as “alarmist and speculative” fears that the axing of tens of thousands of jobs in the face of crippling losses could trigger a black hole in its pension fund.

The Post Office, now renamed Consignia, was responding to a weekend report that there could be a pensions shortfall of £600 million, according to a report by accountants Arthur Andersen for Postcomm, the company’s regulator.

Andersen is understood to have told Postcomm that Consignia, expected to lose £200 million this year on its trading activities, will have to make additional contributions to make up the shortfall caused by the job cuts.

A spokesman from Postcomm said: “It does appear that Consignia knows about this and it’s very much for them to answer.

“It’s for them to make up the shortfall, and lots of other companies are in the same position because pension funds have not been doing that well.”

Consignia has said it will get rid of up to 30,000 jobs in a bid to help wipe £1.2 billion off the costbase by April 2003. It is doing this because it is bleeding money as new competitors are able to compete for its previous monopoly business.

But a Consignia spokesman said yesterday of the pensions claim: “This is alarmist and speculative, and we do not know where Andersen would have come up with a figure of £600 million.

“By law it’s up to an employer to make sure it stays fully-funded with additional contributions if necessary. But it’s not a problem. Pensions will be paid from the fund.”

The spokesman said it was by no means certain that there would be the full 30,000 job cuts, and also that many who go may be young and nowhere near pension-drawing age.

“We have not said how many job losses there will be, we have just said up to 30,000. It could be considerably less than that,” the spokesman added.

“The Andersen report may have taken the top end of the scale in terms of numbers, and this speculative media report then [assumes] they will all be taking their pensions early.”

The spokesman said this was not the case as many of those who went “will be nowhere near retirement age”.

On the subject of additional contributions from Consignia to stop its pension fund swinging into deficit, the company’s chief executive, John Roberts, was reported as saying yesterday: “We do not know yet by how much.

“It depends on how many people leave us and their ages. We are negotiating this now. By law we have to make up the pension fund contributions.”

The speculation around Consignia comes as increasing numbers of companies have closed final salary schemes to new, or even existing, staff because of fears that they will be unable to fund them. The three Post Office pension were valued at nearly £18 billion last year.