Royal Mail commits to further talks with CWU ‘as a matter of urgency’

Written by Talya Misiri
04/10/17

Royal Mail has stated that it is committed to further talks with its workers’ union, the Communication Workers Union to prevent industrial action and reach an agreement on its long-running pension dispute.

In response to the result of the Communication Workers Union’s ballot for industrial action, which presented 89.1 per cent of staff in favour of industrial action, Royal Mail has displayed its eagerness to engage in further discussions.

While a ballot for industrial action does not necessarily guarantee a strike, Royal Mail has said that it is “committed to further talks as a matter of urgency, to reach agreement with the CWU. There are no grounds for industrial action. We want to reach agreement.”

Royal Mail added that it is “very disappointed by the announcement that CWU members have voted in favour of industrial action”. However, it said that due to the fact that there was a 74 per cent turnout for the ballot, and taking into account the frontline employees who are not union members, (a total of 18,000 people), only 57 per cent backed a strike.

“Industrial action is damaging for our business. It undermines the trust of our customers. It makes it harder to pay for the great terms and conditions we provide for our employees. National industrial action means the current offer from Royal Mail, including on pensions, will be taken off the table,” Royal Mail said.

Nonetheless, Royal Mail highlighted that in 2013 it made an Agenda for Growth, a legally binding agreement, with the CWU. As a result of this, Royal Mail has “brought to the CWU’s attention the contractual dispute resolution procedures included in the AFG, which both sides are required to follow once instigated. They escalate to independent external mediation, which we expect will take close to Christmas to be completed, and may be longer. We believe these dispute resolution procedures must be followed. The union cannot take industrial action until they have been completed.”

In a letter, Royal Mail head of pensions strategy Douglas Hamilton commented: “The CWU came forward with a Wage in Retirement scheme, but, unfortunately, this scheme would not be sustainable, secure or affordable for the Company or our employees. The CWU’s scheme is an attempt to set up a defined ambition type scheme within the current defined benefit regulatory framework. Unfortunately that just doesn’t work.

Among new pay proposals, Royal Mail has proposed the replacement of the current defined benefit pension scheme, the Royal Mail Pension Plan, with another type of DB scheme, or the chance for members to transfer to another defined contribution scheme. Royal Mail has also offered improvement for members of the Royal Mail Defined Contribution Plan with a maximum company contribution of 10 per cent.

Hamilton added: “Unfortunately, our current defined benefit scheme is just not affordable. If no changes were made, annual contributions would increase next year from around £400m to around £1.2bn. That increase is at least three times more than our annual free cash flow. That’s on top of what we already pay into the scheme. No business could do that.”

“In short, we’ve put forward a proposal which provides a good and fair outcome for members of our defined benefit pension scheme. We’re also proposing increasing Royal Mail’s contribution to the Royal Mail Defined Contribution Plan, which benchmarks very well compared to other large employers in the UK.”

The company highlighted that the Post Office is a separate business from Royal Mail and its employees do not have involvement with the dispute.

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