The government has proposed to create a new government pension scheme and to transfer to it rights which members of the Royal Mail Pension Plan (RMPP) have accrued up to a cut off date to be determined by secondary legislation made under the Postal Services Bill 2010 as part of the privatisation of the Royal Mail,
The plans were tabled in the bill, which was introduced into the House of Commons on 13 October.
The Royal Mail Pension Plan (RMPP) has approximately 440,000 members and an actuarial deficit of £10.3 billion as of 31 March 2009.
According to the bill, members who are no longer accruing service will have their pension rights met by the new plan. Members who are continuing to accrue rights after the cut off date will have their pension rights met by the government scheme in respect of rights accrued before that date and the RMPP in respect of rights accrued after that date.
Part two of the bill gives power to the Secretary of State to remove historic pension liabilities from the Royal Mail and transfer them to government.
In particular, the Secretary of State is given power to: establish a new statutory scheme which may be used to provide benefits to certain members of the Royal Mail Pension Plan; transfer rights and remove liabilities from the RMPP; transfer assets from the RMPP to the government; and divide the RMPP into sections, and allocate assets and liabilities between those sections.
Vince Cable, business secretary, said “Royal Mail and the Post Office are cornerstones of our society. My policy is to put them on a stable footing for the future.
“Royal Mail is in a dangerous position – there is no hiding from the facts: mail volumes falling; a multi-billion pension deficit; less efficiency than its competitors and an urgent need for more capital at a time when there are huge constraints on the public purse.
“The company now has to go further and faster to innovate, modernise and adapt better to the digital age – that requires substantial investment. This investment needs to be delivered by the private sector, particularly in light of the huge public sector deficit.
“Our package is of crucial importance. For employees – a stable company to work for, shares in the future of the business and the secure pension they deserve.”
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