The Communication Workers Union has committed to the closure of three final salary pension schemes ahead of its triennial valuation in December 2017, Pensions Age has learned.

A Re-Design Update, issued by CWU general secretary Dave Ward and senior deputy general secretary Tony Kearns in March 2017, notified branches that the union is losing cash income disproportionately.

According to the update seen by Pensions Age, the CWU intends to close three defined benefit schemes to future accrual and increase the retirement age from 60 to 65. With this, the employer has proposed the introduction of a new DB career average earnings scheme for all of its employees.

The union is currently in a dispute with Royal Mail over its proposed changes to its defined benefit pension scheme. Earlier this month the union announced its plans to launch a national industrial action ballot over the Royal Mail pension dispute.

The CWU noted that the proposed changes to the CWU DB schemes could result in a reduction in expenditure on current levels of £980,000 per annum.

However, while the update discloses the union’s intentions to implement its pension reforms this month, September 2017, this is two months ahead of its triennial valuations in December 2017.

Ward and Kearns noted that the triennial valuations of the existing schemes could have a negative impact on costs.

“We also have to be mindful that the next round of triennial valuations of the existing schemes takes place in December of this year and this has the potential to impact negatively on costs in this area”, the update stated.

At present, as an employer the CWU sponsors three separate pension schemes that include legacy schemes from predecessor unions UCW and NCU, and a CWU 2000 Scheme.

CWU latest accounts show that the union posted a deficit of £5.432m, with its DB schemes are £19.4m in the red. Last year, the schemes paid out £2m more in benefits than were received in contributions.

Ward and Kearns said in the Re-Design Update: “Over a number of years now, as in virtually every other organisation, the CWU has not been immune to the spiralling costs of pensions and the combined cost of these three schemes in terms of deficits, accrual rates, admin and the benefits due, are no longer sustainable.

“However, unlike most employers, the union remains committed to providing all our employees with an affordable alternative that will still provide decent pensions.”

The update added: “Whilst it is appropriate that branches are aware that the cost of pensions is being addressed, it is ultimately a matter between us as the employer, our employees and staff side unions to enter into free collective bargaining in order to determine the outcome through recognised and appropriate consultation and negotiation processes.”

Pensions Age asked the CWU general secretary why the union is aiming to implement its pension reforms ahead of the triennial valuation. The CWU said that it has no comment on this matter at this stage.

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