Royal Mail Workers May Strike Over Pension

Union ballots more than 100,000 workers, recommending they endorse industrial action.

The UK’s Communications Workers Union (CWU) is asking more than 100,000 of its members who are employees of postal services provider Royal Mail to vote for industrial action over the company’s plans to replace its defined benefit pension plan.

“After very serious consideration, it is the view of the postal executive that sufficient progress has not been made,” said Terry Pullinger, deputy general secretary postal at CWU, in a video announcement to its members. “Unfortunately, we have not been able to shift the employer on some of the key principled issues.”

Pullinger strongly encouraged the members to vote in support of the proposed industrial action. Royal Mail announced on May 8 that the company’s pension plan will close to future accrual on March 31, 2018.

Under the company’s proposed defined benefit cash balance plan, Royal Mail would make annual cash contributions of around 13.6% of pensionable pay in respect of plan members’ retirement benefits. The company would contribute an additional 2% for other member benefits, including death in service and ill-health cover. Plan members would also have the option of joining a new defined contribution plan, where the company contributions would also be 13.6% of pensionable pay. 

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“Royal Mail is very disappointed that the CWU has announced it will issue a formal notice to ballot for industrial action,” said the company in a statement. “We believe there are no grounds for industrial action. We remain committed to reaching a negotiated agreement with the CWU on pay and pensions, and other issues we have been discussing. A ballot does not necessarily mean there will be industrial action.”

The CWU said that a change from a defined benefit plan to a defined contribution plan would see some of its members losing between 30% and 60% of their promised pension. It also says the amount of money workers who are currently in the defined contribution plan are building up is “totally inadequate” for their retirement. It also said offering two different plans to people doing the same job is “wrong,” and that it is time to end the unfair two-tier pension provision.

Royal Mail, which was privatized in 2013, has approximately 90,000 workers in a defined benefit plan, which pays out according to workers’ final salary and length of service. Its closure to new members in 2008 resulted in about 40,000 workers joining a defined contribution plan, according to Reuters.

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