New recruits at Royal Mail will likely find the company's final salary pension scheme closed off to them after the group admitted it was entering consultation on how to address rising deficits.
As part of a massive government investment plan unveiled today, Royal Mail intends to consult on its final salary scheme in two months time, with talks expected to last until October.
The move comes as the group revealed its pension deficit had risen to £6.6 billion, amid fears that existing workers could ultimately lose out.
Royal Mail chief executive Adam Crozier today said that the fund was a "major drain" on the group's resources, with servicing costs rising £280 million to £730 million during the last financial year.
"It is important we safeguard the future of the pension fund for our people, who regard having a final salary pension scheme as a key benefit of working for Royal Mail," he said.
"But the £730 million annual cost of servicing the pension fund clearly damages our competitiveness as we need to increase the price of our products and services to pay for it."
The group also claimed today that its financial operations had been "transformed" since coming under new management, with the £1 million daily losses of two years ago replaced with annual operating profit of £355 million.
As part of the government-supported investment plan unveiled today by trade and industry secretary Alistair Darling, Royal Mail will receive almost £4 billion to modernise its operations and continue the restructuring of its network.
"We recognise that there are a number of difficult changes that need to be made to the way the company operates, including limiting the pension liability going forward, and fully support the business in making them," Mr Darling commented.
"It is for the management and staff to make the changes necessary to give the company a sound platform on which to build for long-term success in a competitive market."
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