Government faces union battle over Royal Mail deficit

Civil servants from the Department for Business Innovation and Skills (BIS) begin Whitehall negotiations with Royal Mail and the Communications Workers Union (CWU) today (Monday November 21).

The government takes on the bulk of the £27.5bn assets and liabilities of the scheme next March but future benefit increases based on rising pay will remain the responsibility of a funded scheme, which will retain some of the existing assets of the plan to meet this.

At the moment BIS is proceeding from the assumption this will be £1.5bn, although the CWU is calling for this to be able to change pending next year’s actuarial valuation, as well as for more discussion of which assets are left with the remaining funded scheme.

But the discussions will also centre on a separate fund to be drawn down by the trustees if the deficit of the funded scheme reaches a certain point.

A £1.2bn Escrow fund does exist for emergencies likely to derail the last RMPP deficit reduction plan but BIS wants to hand this to the soon-to-be privatised sponsor so £200m a year will be available to it in predefined cases of corporate need.

CWU deputy general secretary postal Dave Ward told PW this should either be retained for use by the trustees of the remaining plan or money should be found elsewhere for this purpose.

“We expect the 2012 valuation to reduce liabilities because of the CPI switch but stock market volatility could take us back into deficit,” he said.

“The Escrow fund is one way of looking at this but it’s not our only suggestion. What we’re really looking for is a guarantee.”