Royal Mail pension scheme members have been warned that their retirement savings could be halved if the plan to privatise part of the business does not go ahead.
Royal Mail pensions trustees chairman, Jane Newell, has said that if the recommendations made in the Hooper report were not implemented it would have ‘severe consequences’ on the pension scheme.
The Hooper report, published in December, called for Royal Mail to be part-privatised as soon as possible and for the government to take over the pension scheme.
In a letter to the business Secretary, Lord Mandelson,†Newell said that the trustee had a duty to protect the benefits of the 450,000 members of the Royal Mail Pension Plan and raised concerns over the strength of the organisation’s long-term finances.
“At present, in a winding-up the plan would not even be able to provide as much as 50% of member’s benefits,” she said.
She added that the pension fund deficit was likely to be far greater than the £5.9billion quoted in the Hooper report.
While in theory the Pension Protection Fund (PPF) would act as a safety net for members, Newell said she would not like to speculate on its ability in practice to absorb the plan without putting an intolerable levy strain on remaining UK pension schemes.
“The trustee of the Royal Mail Pension Plan, subject to obtaining satisfactory guarantees from the government, is in favour of the Hooper report’s recommendations. We very much look forward to these being implemented, as soon as possible, for the benefit of all concerned,” Newell said.
Lord Mandelson is due to set out his plans for Royal Mail in parliament on 26 February.