Royal Mail set to close defined benefit pension scheme in 2018

What does this mean?

Royal Mail has said it will close its defined benefit pension scheme in 2018.

The pension scheme is currently in surplus but will run out in a year’s time.

Royal Mail contributes around £400m a year, it said this will have to change in 2018 to more than £1bn.

The Communication Workers’ Union (CWU) does not agree with the closure, it has threatened to take industrial action if an agreement isn’t made.

Royal Mail said: “We have concluded that there is no affordable solution to keeping the plan open in its current form,”

“Therefore, the company has come to the decision that the plan will close to future accrual on 31 March 2018, subject to trustee approval.”

The CWU has said their members could lose a third of their future pensions.

Ray Ellis, the union’s acting deputy general secretary, said: “The CWU has made clear that any attempt by the company to impose change without agreement will be met with the strongest possible opposition, including a ballot for industrial action,”

“We will not stand by and watch the company abandon the pension promises it made at the time of privatisation which threatens our members with massive cuts to their future pension benefits and insecurity and poverty in retirement.”

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