Royal Mail has launched a review of its final salary scheme with a view to closing it, little more than three years after the company was privatised.
In a statement today (5 January), a Royal Mail spokesperson said that, while no final decision had been made, it had not seen any affordable way of keeping the scheme open.
It therefore proposed closing the scheme to new accruals in 2018, with all future pension contributions going into a defined contribution scheme.
"With our unions, we have been actively exploring possible changes to potentially enable us to keep the plan open on a defined benefit basis after March 2018 as part of our pension review process," the spokesperson said.
"Unfortunately, we have not been able to find an affordable way of doing this so far."
The Royal Mail scheme is one of the few defined benefit schemes that is in surplus.
However, a spokesman for Royal Mail said it expected the surplus to "run out" in 2018.
Unite, one of the trade unions representing Royal Mail employees, said today's announcement was "cause for concern", and would be encouraging its members to participate in the consultation period.
The consultation is complex and the company needs to ensure that its employees, our members, clearly understand the potential impact on them.Brian ScottOfficer for the Royal Mail Brian Scott said the union would not rule out industrial action.
“The consultation is complex and the company needs to ensure that its employees, our members, clearly understand the potential impact on them, and the reasons and justification for the proposed changes," he said.
“It is too early to make any pronouncements on industrial action, but if the company does not respond positively on this and other issues we cannot rule this out.”
While public sector defined benefit schemes have remained open, those in the private sector have overwhelmingly moved towards closure in recent years.
In September last year, Marks & Spencer announced it was closing its final salary scheme to new accruals.
German car manufacturer BMW followed suit with its UK defined benefit scheme later the same month.
In August last year, JLT Employee Benefits reported that just 5 per cent of FTSE 250 companies were contributing to company DB schemes for a significant number of employees.
james.fernyhough@ft.com
