Royal Mail's "pioneering" pension deal was today put under the spotlight by an influential parliamentary committee.
Pensions minister Guy Opperman told the Work and Pensions Committee the government is looking for the easiest way to introduce collective defined contribution (CDC) pension schemes to the UK.
Royal Mail recently agreed a pay and pensions deal with its main union – the 110,000-member Communication Workers Union – ending a protracted and bitter industrial dispute. As postal workers prepared for their first post-privatisation strikes last year, shares in the firm tumbled and Royal Mail was booted out the FTSE 100.
The postal giant bounced back in the latest reshuffle after around £2bn has been put on its market cap since a 2017 November nadir.
As part of the agreement, Royal Mail will introduce a CDC pension scheme. This has been billed as a halfway house between a defined benefit fund – where members receive a final salary – and a defined contribution scheme – where retirement payouts are dependent on the investment performance of underlying assets.
CDC schemes, which guarantee retirement savings are worth a minimum amount, are popular abroad, in particular in the Netherlands. But for there is a lack of legislation in the UK allowing them to be introduced.
Opperman said the government was trying to find a way of utilising current statute. "But there is still a long way to go," he said.