Royal Mail, CWU Settle 10-Month Pension Dispute

Union members must approve deal in national ballot.

After a 10-month battle over the replacement of its workers’ defined benefit pension plans, the UK’s Royal Mail and the Communication Workers Union (CWU) have reached an agreement, announced Thursday.

In addition to pay increases and a shorter work week, as well as cultural and operational changes, the agreement will close the defined benefit plan on March 31, replacing it with a new “collective defined contribution” (CDC) plan, which pools contributions and shares the longevity risk between members. Alongside it will be a defined cash benefit scheme, which has the company guarantee a minimum lump sum at the normal retirement age. Discretionary increases will be applied upon retirement subject to the plan’s performance. According to a news release, Royal Mail and the CWU will lobby government to ensure the creation of a proper CDC plan.

“This agreement marks a new chapter for Royal Mail and the CWU,” Royal Mail CEO Moya Greene said in a statement. “Following the conclusion of a helpful mediation process and further talks, we have delivered the right result for Royal Mail and our stakeholders. This is an affordable and sustainable solution that enables us to continue to innovate and grow and to meet the intense competition with confidence.”

The first pay hike will give Royal Mail employees a 5% increase from October 2017, with a 2% increase in April 2019. The work week will then be reduced by one hour in October 2018, with an additional one-hour reduction to follow in October 2019. The changes are subject to newly enacted efficiency initiatives.

As part of the culture and operational changes, the company will push back the last letter delivery time a half-hour to 3:30 p.m. in urban areas and 4:30 p.m. in rural ones. Royal Mail will also conduct a review of the agenda for growth starting in 2019, with the undertakings and protections ongoing and remaining until 2020.

“Both Royal Mail and the CWU have shown that disputes can be resolved without recourse to damaging industrial action,” said Greene, who added that the company expects an adjusted group operating profit before transformation costs of “at least £680 million” for the current fiscal year. “Our people’s commitment to serve customers throughout this period has allowed our good trading performance to continue.”

The final agreement will be authorized once it is voted in favor of by CWU members in an upcoming national ballot.

“Royal Mail and the Communication Workers Union (CWU) are pleased to announce that the negotiators have finalised the details of a proposed agreement covering the matters under discussion which include pensions, pay, the shorter working week, culture and operational changes,” Royal Mail and the CWU said in a joint statement. “The proposed agreement will now be considered by the CWU’s Postal Executive Committee next week. A further announcement with the details of the final agreement will be made in due course.”

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