Royal Mail 'strikes deal to clear pension deficit'

24-08-2006

Royal Mail has allegedly agreed a deal to clear its £5.6 billion pension deficit.

Under terms agreed with pension fund trustees, the company will pay up to £750 million annually into the 450,000-member scheme, the Daily Telegraph reports.

The newspaper claims that the payments will be made over a period of 17 years, significantly longer than the ten years Britain's pensions regulator David Norgrove has recommended private companies take to address deficits.

It is unclear how the Royal Mail, which last year reported operating profits of just £355 million, would pay for such a settlement.

The publicly-owned postal service has seen its pension deficit increase significantly in recent years, jumping to £5.6 billion last year from £4.5 billion a year earlier.

Last month the government announced that it had agreed to allow Royal Mail to release £850 million from its reserves to help meet the deficit.

The money, agreed as part of a £1.75 billion investment package, will be placed in a special account for the exclusive use of the group's pension fund.

Royal Mail refused to comment on reports about its plans to cut its pension fund deficit.


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