U.K.'s Royal Mail Plans to Close DB Plan

September 24, 2007 (PLANSPONSOR.com) - The U.K's Royal Mail plans to shut its DB plan for its approximately 130,000 existing employees as well as new workers and raise the retirement age by five years, according to the Times Online.

The Royal Mail’s decision to close its plan is expected to trigger stikes by thousands of employees who are in a dispute over pay and working arrangements. The Royal Mail closed its DB scheme for new employees in February.

The move to also shut the plan to existing workers is expected to inflame already strained relations between the Royal Mail and the Communication Workers Union (CWU), which is expected to stage two 48-hour walkouts next month unless the post backs down on the pension changes and improves a pay offer.

The Royal Mail is also currently entangled in a dispute with postal managers over its proposal of “banking” current benefits and linking them with retail price inflation (RPI) rather than salary levels. Unite, which represents 12,000 post managers, says that this change would cost pension scheme members £1.5 billion.

“Even accounting for inflation, the £1.5 billion that the members could lose far exceeds the amount taken from Royal Mail by the great train robbers,” said Paul Reuter, the national officer for the Unite union, according to the Times Online.

According to the news report, the Royal Mail will also lift the retirement age from 60, which is enjoyed by many public sector workers, to 65.