'Major advance' in Royal Mail pension negotiations

By Max Goldbart, Thursday 07 December 2017

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Having halted a planned 48-hour Communication Workers Union (CWU) strike in October, the Royal Mail has issued an update on recommendations for worker pensions and pay.


Harris' report said the two are continuing talks "with the aim of reaching agreement on the full range of issues under discussion"

In the update issued yesterday (6 December), Royal Mail said the two parties had received a report prepared by mediator Lynette Harris under the dispute resolution procedures set out in its Agenda for Growth, with Harris issuing a number of recommendations. 

Harris recommended that the Royal Mail and the CWU should commit in principle to the future introduction of a collective defined contribution scheme with a defined benefit element, and that to support the introduction of the scheme, both parties should establish a pensions forum, with the responsibility for lobbying the government to make the necessary changes so that the scheme can be established.

More immediately, Harris said Royal Mail should implement from April 2018 a defined benefit cash balance scheme on terms already proposed by the company, and that, in addition, existing Royal Mail defined contribution plan members with five years or more continuous service should have the option of joining the scheme. She also recommended that the Royal Mail auto-enrol current and future members of the plan to the top tier of contributions, which are 10% from the company and 6% from the member. 

A Royal Mail statement said: “The mediation process was helpful in bringing Royal Mail and the CWU together to advance the discussions. Mediation has helped both parties to better understand their respective positions.”

It went on to stress that the recommendations were not legally binding but have been “useful in framing further discussions”.

“Royal Mail and the CWU are continuing talks with the aim of reaching agreement on the full range of issues under discussion,” it said.

However, a statement on Facebook from the CWU said that the Royal Mail’s agreement to the union’s proposal for a single pension scheme for all CWU members based on a wage in retirement represents a “major advance in the talks and arguably the most significant step forward over recent months”, and it went on to describe the agreement as “historic”. 

The CWU initially voted to strike in October over Royal Mail's plans to close its defined benefit pension scheme in April 2018 but the action was called unlawful as the union had not followed dispute resolution procedures and an injunction was granted stating it must withdraw its strike call. 

Other recommendations from Harris included an increase of 2.6% including base pay, overtime and allowances, to be back dated from April 2017, an increase of 2% to base pay from April 2018 and a one-hour reduction to the working week during 2018/19. 

Final delivery time was also recommended to move back by 30 minutes to 3.30pm in urban areas and 4.30pm in rural areas, and Harris also recommended that the CWU and Royal Mail work more closely together to “improve working culture”.

“Against the backdrop of the CWU’s ballot result and the external mediator’s final report, it is clear the CWU has successfully shifted the employer’s position and secured the basis for a far better agreement for our members based on the ‘Pillars of Security’ we seek,” added the CWU statement. 

The Royal Mail’s Agenda for Growth is set to be reviewed in 2019.

In its half-year results published last month, the group reported continued letter volume declines.

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