Royal Mail has today launched a consultation with members of its pension plan and its trade unions regarding the future of the scheme.

The firm is reviewing its existing defined benefit pension scheme and plans to install a new plan by April 2018, subject to agreement with members and trade unions Communication Workers Union and Unite/CMA.

The consultation will continue until 10 March this year, the Royal Mail confirmed.

"No decisions will be made until the consultation process is completed, Royal Mail has considered members' views and discussed responses with its unions as part of the pension review process," the company said in a statement.

In June 2016, Royal Mail informed employees in June that the cost of keeping the plan open was unaffordable and it could not continue to keep the scheme running in its present state beyond 2018 as it had previously promised. Although the plan is currently in surplus, Royal Mail expects this to run out by next year.

At present, Royal Mail contributes an approximate £400m into its DB scheme which secures a pension based on employees’ average salary over their lifetime.

The Royal Mail noted that the proposal they are currently discussing, if implemented, would be a very competitive pension package compared to industry competitors and other large employers, would help the Royal Mail to protect pension benefits that members have accrued, provide sustainable future arrangements and enable the business to continue to provide as many good quality jobs as possible.

Royal Mail Group HR director Jon Millidge said: “We know how important pension benefits are to our people. We are sorry that their current arrangements will soon not be affordable. We believe our proposal would be a fair outcome; it is the best option available. It is a very competitive pension package compared to the industry and other large employers. It is about continuing to provide sustainable, good quality pension benefits and as many high quality jobs as possible. We will carefully consider all viable options put forward by members or their representatives.”

Unite officer for the Royal Mail Brian Scott said: “This is a cause for concern to Unite and we will be looking to mitigate the impact of any proposed changes during and after the consultation process. We will also be strongly encouraging our members to participate in the consultation process.

“The consultation is complex and the company needs to ensure that its employees, our members, clearly understand the potential impact on them, and the reasons and justification for the proposed changes."

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