The pre-withholding tax accounting surplus of the Royal Mail Pension Plan (RMPP) increased by £590m in the six months prior to 29 September to total £4.29bn.

In its half-year report, Royal Mail noted that after the withholding tax adjustment, the accounting surplus of the RMPP was £2.79bn.

Royal Mail stated that the fall in the real discount rate contributed to the increase, as it had a greater impact on assets than on liabilities.

The scheme, which closed to future accrual in March 2018, had assets totalling £11.9bn and its liabilities were £7.63bn.

Royal London also operates several other pension schemes, including a defined benefit scheme which has a deficit of £151m.

The firm made contributions of £146m during the six-month period, the equivalent of 15.6 per cent of salary, while members contribute 6 per cent.

The Royal Mail Senior Executives Pension Plan entered into a buy-in in 2018, with all the liabilities covered by insurance policies. The report states that this has “significantly reduced the potential risk to the company in respect of this scheme”.

Royal Mail, alongside the CWU and the government, has been working on introducing collective defined contribution schemes to the UK.

Legislation for the schemes were included in the Pension Schemes Bill, which has had no further progress due to the upcoming General Election.

The company expects to contribute around £395m in 2019/20 to its pension schemes, with employees expected to contribute around £110m.

Commenting on the report, Royal Mail chief executive officer, Rico Back, said: “We continue to expect to deliver adjusted group operating profit of between £300-340 million (before IFRS 16) in 2019-20, in line with guidance. The business has delivered good in-year trading cash flow, supporting our new dividend policy.

"Our transformation is behind schedule. We are investing more because of the industrial relations environment, the General Election and Christmas, to underpin our quality of service at this key time.

“This is likely to impact our productivity for the remainder of the year. When combined, revenue and cost headwinds could possibly result in a break-even or loss-making position for the UK business in 2020-21.

“We maintain the ambitions associated with our Journey 2024 plan as set out in our full year results in May.”

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