Royal Mail pensions: the elephant in the post room

Talks between Royal Mail and the Communication Workers Union are not going at all to plan.

They were meant to wrap up on 22 January, three weeks ago today, according to independent chair Roger Poole, and they are still continuing without so much as a hint of resolution. Poole is a former chair of Northern Ireland’s Parades Commission and has been praised by negotiators in the Royal Mail talks. So it’s likely to be something substantial that’s blocking progress – like redundancies, replacement of full-time with part-time jobs and the calculation of walks – postmen and women have complained that the walks are too long.

Meanwhile, the issue of Royal Mail’s pension deficit, which the CWU regard as “the elephant in the room”, remains untouched. Outgoing CEO Adam Crozier has suggested the deficit may have reached a record-breaking £10 billion, and it may cost even more to bail out. It could sink the company if the government doesn’t take on the liability. Servicing the deficit is costing Royal Mail £280 million a year – the company is still turning a profit, but the deficit can jeopardise that.

Lord Mandelson promised to do just that, but only as part of a deal including part-privatisation which he argued was necessary to make the company viable in the Internet age. The CWU retorts that the reason for the deficit is past governments taking a massive pension contributions holiday for over a decade.

Anyway, the Postal Services Bill was supposed to resolve the issue, but after it was shelved (news which I broke on this blog last year) both part-privatisation and the bailing out of the pension fund were kicked into the long grass. A motion passed at last year’s Labour party conference, calling on the government to do something about it, hasn’t achieved much. More recently the CWU put out a report on the subject, just here.

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