Money Marketing reports that nearly 90 per cent of Royal Mail union members have voted in favour of strike action after the postal service’s Defined Benefit pension scheme was closed.
While a new money purchase (‘Defined Contribution’) set-up means combined employee and employer pension contributions could almost reach 20 per cent, The Communication Workers Union described the pension changes as an “attack on the pension rights of hard-working postmen”.
Union executives will meet later this week to decide the next step, but the vote, which saw 70 per cent turnout, leaves open the possibility of a Christmas walkout.
Hargreaves Lansdown senior pensions analyst Nathan Long says: “Royal Mail’s decision to close their defined benefit pension scheme is entirely in keeping with many employers keen to cap the uncertainty of future pension costs. Delivering on these changes is proving more challenging, with the threat of industrial action now hanging over the busy Christmas period.
Although we have sympathy for the posties, it should be remembered that this is something private companies have gone through already, due to the unsustainable increased costs for an employer of providing Defined Benefit (DB) pensions. No FTSE100 company that we’re aware of offers new employees a DB scheme now – 25 years ago they all did.
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