Monday, 19 March 2012

The Government’s raid on the Royal Mail Pension Fund

I am surprised that the Pensions world has so far been so sanguine about the extraordinary and unprecedented proposal by Government to sequester the Assets of the Royal Mail Pension Fund. The action is almost Maxwellian in its audacity and whilst presented as being in the interests of the members of the Fund it is in fact a cynical move designed to boost the Treasury coffers and prepare the Royal Mail for privatisation. Whilst the Fund has a negative Funding ratio it nevertheless has £28bn of Assets that employees, the sponsor and trustees have built up over the years. It is the members’ money and only they have a right to it.

By transferring members from a funded trust into the much less assured world of being an unfunded liability on the public finances is far from necessarily in their interests. As we have seen Governments can and do change the basis of Public Sector pensions at their discretion and there is little that anyone can do to stop them. A Pensions Trust provides legal protection to its members and has Trustees to exercise that protective role. At a stroke Royal Main fund members will lose that security and no longer have Trustees acting in their interests.