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Union rejects latest pensions offer

ROYAL Mail faces a stand-off with its biggest union over a controversial pensions shake-up.

The privatised postal giant yesterday announced an improved offer under plans to close its 88,000-member defined benefit pension scheme.

Royal Mail called it “a sustainable and affordable solution”. But the Communication Workers Union immediately rejected it. Terry Pullinger, deputy general secretary for postal, said: “It does not meet our aspiration of a wagein-retirement pension scheme.”

The CWU is at odds with Unite, which represents Royal Mail managers, and called the offer “the best achievable in the circumstances”.

Royal Mail is offering defined benefit members two options. The first involves the company putting the equivalent of 13.6% of workers’ salaries into their pension, plus 6% from the employee. The funds would then, like the majority of pensions, be invested.

Most defined benefit schemes pay members an income in retirement, based on either their final or “career average” salary.

But Royal Mail’s proposed “cash balance” scheme would pay workers just a tax-free lump sum when they retire.

Royal Mail’s only guarantee is that members would at least get what they put in. Members can also opt to switch to a defined contribution scheme.

Royal Mail says its proposals would prevent its annual £400m pension contributions soaring to over £1bn.

Pensions expert John Ralfe said: “The cash balance option is just smoke and mirrors, and adds nothing for workers.”