POST OFFICE: PENSIONS – DEFINED BENEFIT SCHEME – PROPOSAL TO CLOSE THE SCHEME
The Post Office has today announced a 60 day member consultation, from Friday 5th February until 5th April, in respect of its plans to close the Post Office (Defined Benefits) Section of the Royal Mail Pension Plan (RMPP).
Post Office Proposal
The Post Office recently advised us of its plans to close the Defined Benefits (DB) pension scheme, which will affect those members who joined the scheme prior to 1st April 2008. Under the proposals, the DB scheme would be closed to any new benefit accrual and members would build up benefits in a new Defined Contribution (DC) scheme from 1 September 2016. The new DC scheme will also include members of the current DC scheme.
Despite our strong objections to the unnecessary haste of commencing the 60 day members’ consultation in relation to the plans, the Post Office is pressing ahead and members will begin to receive documentation and information from this morning on the plans.
Our key objections to the Post Office’s plans are as follows:
The Post Office is rushing into “consultation” with members of the DB scheme without meaningful dialogue with the Union. Just two formal meetings on this issue have been held and in both of these meetings we were presented with what seemingly is a fait accompli. In our view, the Post Office is conducting a tick box exercise in its “consultation” with both the Union and the members of the scheme and is determined to press ahead with closure of the scheme, whatever the outcome of the “consultation”.
The DB scheme is not in deficit – there is sufficient surplus with £136.1m as at 30th September 2015 to allow the scheme to continue until 2022. This surplus was created by members giving up benefits and should be viewed as members’ money.
We estimate the Post Office will save over £5m a year under the proposal as the current contribution is 17.1% per member into the DB scheme, compared with a greatly reduced contribution into the proposed new Defined Contribution scheme.
We understand that after closing the scheme, the Post Office intends to de-risk it by moving into very low yielding assets or even by buying out the benefits with an insurance company. This will remove the scheme from the Post Office’s balance sheet.
We do not accept the Post Office’s case for the scheme closure and believe members’ money should be spent on benefits, not used to subsidise the business.
Steps we have taken thus far are as follows:
Dave Ward, General Secretary has written to Baroness Neville-Rolfe, the Post Office Minister BIS, seeking an urgent meeting regarding pensions and the future of the Crown Office Network.
We have written to Neil Hayward, Group People Director, Post Office, raising our concerns over the Post Office’s plans, and in particular, the unnecessary haste to commence a fait accompli “member consultation”.
A letter has been sent to Chris Hogg, Chief Executive, Royal Mail Pension Trustee, seeking an urgent meeting and also raising our objections to the Post Office’s plans. In this regard, a meeting has been arranged for later this week.
Hilary Salt, specialist pensions advisor from First Actuarial has been instructed to provide advice and guidance to the Union. We will continue to seek Hilary’s advice as matters progress.
Next Steps
The Postal Executive is receiving documentation at its statutory meeting today. Following this meeting we will issue a further LTB reporting on Postal Executive Policy on this important and complex issue.
Members will be receiving a Union communication to home addresses this week, outlining our serious concerns with regards to the Post Office’s attack on their pensions. A copy is attached for your information. In the meantime, Branches are urged to encourage members not to react to this news by leaving the DB pension scheme.
Further developments will be reported at the earliest opportunity.
If you have any questions in relation to this LTB, please contact Lea Sheridan – lsheridan@cwu.org.
Yours sincerely
Andy Furey
Assistant Secretary
Email Attachments – Click to download
LTB 063/16 Post Office: Pensions – Defined Benefit Scheme – Proposal to close the Scheme
CWU Eastern No5 Branch 
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