What's happening with the Royal Mail pension?

SOLIDARITY interviewed CWU Postal Executive member Dave Warren in relation to the changes to the Royal Mail pension which the company wants to bring in.

Download this interview as a PDF leaflet warren2.pdf


There appears to be a lot of confusion over the pension question, and the relationship between the pay deal and the pension proposals. On the CWU website it said that there would be “Full protection of final salary to accrued service benefits” yet it also said that the final salary scheme would be replaced “for the future….. by a similar defined benefits scheme”. What exactly has the union agreed?


The joint statement by the union and management (October 24th) says that RM wants to close the final salary scheme from April 1st 2008 with retirement age to be increased to 65 from April 1st 2010. The statement says “the union supports these proposals”.  This must be the worst agreement negotiated by any union. I don’t agree with workers in the same company being on different pensions, but at least in the civil service, for instance, existing members’ pensions were fully protected, whereas the CWU leadership has agreed that current pension fund members’ pensions will be worse than they currently are! The final salary scheme will become a life average scheme, which obviously means lower pension for many members. In other words the benefits the members accrue after April 1st 2008 will be on a ‘career average’ basis.


The union has said that there will be a ballot on the pension proposals. Will this be a ballot of all the scheme members, including all those receiving a pension now, as well as all Royal Mail managers, or a ballot of CWU members?


There has to be a ballot of all scheme members after the consultation period. But the CWU members should take their decision as to whether or not what the union has negotiated is acceptable. There is some doubt at present over whether the union will ballot its members separately. This is unacceptable. Our members should have their own chance to accept or reject the proposals.


What about the retirement age under the proposals?


Existing members will be able to retire at 60 (with 40 years service) but not on the full pension they currently get. You will only get the full amount at 65. There will be what they call an ‘actuarial reduction’ if you go at 60. New staff will go into a new scheme and will have to work to 65 with a ‘career average’ pension. So there will be a two tier system.


It’s difficult to avoid the impression that the ‘de-coupling’ of pensions from the rest of the deal is because if the members understood fully what is going to happen to their pension then they would throw out the whole agreement.


That’s exactly right. The impression is being given that whichever way the members vote in relation to the pay agreement, they could still have a fight over the pension issue. In reality, if a very unpopular agreement gets voted through we will be in a weaker position to defend our pension because a Yes vote on the pay deal will demoralise many of our members who feel betrayed by the union leadership.


If we want to defend our pension then members should vote to reject the pay deal. If it is rejected then that will put us in a much stronger position to defend our pension.


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