James presses the government on Royal Mail pension deficit

Tuesday, 24, Mar 2009 12:00

James Duddridge, Member of Parliament for Rochford and Southend East has asked the Government about the costs to the public purse of assuming liability for the Royal Mail Pension scheme.

In a question to Pat McFadden, Minister of State for Employment Relations and Postal Affairs, James expressed concern about Clause 20 of the Postal Services Bill, which would allow the Government to take both Royal Mail’s assets and deficits onto the same balance sheet.

The most recent estimates put the Royal Mail pension deficit at £5.9 billion. By assuming liability for the pension scheme the Government is pledging to remove the deficit, through an injection of public money. The scheme also has £23.5 billion in assets, James is therefore concerned, that should these two funds be merged and spent in the same year, the public will have to bail out the full pension scheme of nearly £30 billion.

James said:

“I wanted to urge the Government to rethink their unwise solution to the Royal Mail pension deficit to create a scheme which would protect the pensions of Royal Mail staff while limiting the financial burden on the taxpayer.”

“This plan is flawed as the Government are in the short term absorbing the assets from the pension fund to build up the Treasury, while in the long term relying on the public to make up the shortfall.”