The cost to the Royal Mail of servicing its embattled final salary pension scheme will more than triple to £1.3bn if it keeps it open, the company said today.
In an update today, Royal Mail said based on market conditions at the end of March this year, the cost of funding the scheme will be £1.3bn a year if it remains open, more than three times the £400m the company and its employees currently contribute.
Last month Royal Mail said it will close the scheme at the end of next March after it estimated the cost of maintaining the pension at £1bn a year. Today it confirmed those plans, saying at the current rate the actuarial surplus will be exhausted by the end of 2018.
Since the company's pronouncement last month, Royal Mail has been the subject of fierce criticism from unions. The Communication Workers' Union (CWU), which represents over 100,000 Royal Mail employees, hinted at strike action, saying member payouts will fall by nearly a fifth as a result of the decision.
Today Royal Mail said it was working with unions on a "sustainable and affordable solution" to provide pension benefits after next March.