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Almost half a million Royal Mail staff past and present have been warned that their pensions could be halved if the plan to privatise part of the business does not go ahead.
However, one of the leaders of the nearly 140 Labour MPs fiercely opposed to the sale of a stake in the Royal Mail accused the Department for Business of a crude attemp to put the rebels under pressure by releasing a letter from the trustees of the company’s pension fund.
It is said that without a sale of part of the business, the pension fund deficit would be far greater thant the 5.9 billion pound envisaged in the Hooper repart into the Royal Mail’s future.
The report envisaged the deficit being taken over by the Government to make the business more attractive to outside investors. The Dutch firm TNT has long been seen as the most likely firm to take a stake, of up to 30%.
The pension fund deficit is a long-term drain on the company’s cash and the Royal Mail “is already balance-sheet insolvent”, Ms Newell said. If the recommendation of the Hooper report were not implemented, she said, fully fudning the pension scheme was highly unlikely to be affordable by the Royal Mail, with potentially devastating consequences. In a winding-up the pension plan would not even be able to provide as much as 50% of members’ benefits, she said.
There are 452000 members of the pension plan, 161000 still working and 291000 retired or on deferred pensions. The overwhelming majority are on finalsalary schemes.
While in theory the Government’s Pension Protection Fund would act as a safety net for members, “I would not like to speculate on on its ability to absorb the plan without putting an intolerable levy strain on remaining UK pension schemes,” Ms Newell wrote. She called for the Hooper plan to be implemented “for the benefit of all concerned”.
Lord Mandelson endorsed the Hooper recommendations in December, saying that the Royal Mail could not survive in its current form, because of severe financial constraints and falling demand for sending letters, and it needed fresh investment in technology to prosper.
The Business Secretary is due to set out his plans for the Royal Mail on Thursday. The Bill will start in the Lords. Nick Brown, the Labour Chief Whip, has warned Gordon Brown that he is likely to have to rely on the support of Opposition MPs to get it through. Nearly 140 Labour MPs have signed a Commons motion opposing the proposal.
Unions will stage a protest today against the plans, which they say are deeply unpopular. They say the Royal Mail made a profit of 255 million pound in the last nine months of 2008 and argue that it is healthy and can thrive in its current form.
John Grogan, Labour MP for Selby and one of the leaders of the revolt, said that there was no obvious link between dealing with the pension deficit and part-privatisation. He said the letter from the pension trustees was an obvious attempt to put Labour MPs under pressure. “It lacks the usual subtlety of Lord Mandelson… it is not one of his most sophisticated political manoeuvres,” he said.

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