Vote denies bullet-proof protection for postal workers

Amendment 148 to the postal services bill would have ensured “no material detriment of pension provision developed”, but was voted down by nine votes to eight at a Commons committee on the postal services bill – a decision branded “shameful” by pensioners’ representatives.

Proposed by Labour MP Gordon Banks, the amendment called for employees of the new company, who were employees of the old at the time of a postal transfer scheme, be entitled to the same benefits with the new company as with the old.

The bill , which is awaiting its second reading in the House of Lords, will allow the Royal Mail for the first time to benefit from private capital, and transfers its historic pensions liabilities to the government . 

The public service scheme has been running a reported deficit as large as £10.3bn, according to its latest accounts, and trustees have agreed a recovery plan requiring payments of £282m per year for 10 years from April 2013.

“Had the amendment been passed, the new company would have been forced to put in place a DB pension scheme providing the same benefits as are completely unaffordable for Royal Mail now,” said Adam Bushby, a partner at LG. 

“Similar requirements about future pensions benefits were put in place on the denationalisation of the electricity and rail industries.”

Lesley Browning, a partner at Norton Rose, said the government is keen to stress the privatisation of Royal Mail will be treated like “any other business sale”, not to put off potential bidders.

“From a pensions perspective, this means no requirement to mirror benefits,” she said. “Undoubtedly, this will be unpopular with members and the postal unions.”

Saga director Ros Altmann said the government’s decision not to bullet-proof future pension provision for Royal Mail workers was at odds with its bank rescue.

"None of the workers in the bank pension schemes, even though the banks would have been bust if the government hadn’t rescued them, actually ended up in the PPF [Pension Protection Fund],” she said. 

“I can understand why the postal workers would say if you rescued the banks, and their pensions were safe, they want the same treatment.” 

Roger Turner, executive officer of the Occupational Pensioners’ Alliance, said it was “shameful” for the government not to make sure future pension provision was secured

“As a shareholder, they should have a duty to ensure the people that work for them are protected,” he said.