First it was the banks. Then it was the car companies. Now it's the £22 billion ($31.5 billion) Royal Mail Pension Plan, London, that's going with hat in hand to the British government to ask for money.
In a Nov. 19 letter to Lord Peter Mandelson, Jane Newell, chairman of Royal Mail Pension Trustees Ltd., which oversees the pension plan, warned that fund deficits could far surpass the £5.9 billion estimate published in December from an independent review commissioned by the government. Unless the government steps in, the fund could be facing potentially devastating consequences, Ms. Newell said. In a move that raised eyebrows among critics, the letter was leaked to the press Feb. 24 two days before legislation was to be proposed that would allow the government to help reduce the pension liability and pave the way to sell up to 30% of the company.
The Royal Mail will run out of money to sustain its current universal, six-day service unless its pension fund deficit is solved and its business transformed, Lord Mandelson, U.K.'s secretary of state for business, enterprise and regulatory reform, said Feb. 26 in introducing the legislation. If passed, the bill would shift all historic pension liabilities incurred prior to Dec. 16, 2008, by the fund to the government. General debate on the bill in the House of Lords is scheduled for March 10. Thao Hua