‘We are unlikely to vote “Yes” unless Royal Mail changes its proposals’ to end final salary pensions, Communication Workers Union (CWU) London Regional Secretary John Denton told News Line on Wednesday.
Asked when there will be a ballot on Royal Mail’s pension proposals, after the end of the consultation on 16 January, Denton said: ‘I don’t know, its a (CWU) head office ballot.
‘But I think head office is hoping for negotiations and that Royal Mail will drop its proposals.’
When it was put to him that Royal Mail says it will change from a final salary scheme to a CARE (Career Averaged Revalued Earnings) scheme on 1 April, Denton said: ‘That’s what Royal Mail is proposing and I suppose that is what it intends if it does not drop its proposals.’
Calling the consultation a sham, Denton added: ‘Royal Mail does not necessarily have to consult with stakeholders, it just needs to put its plans forward to the trustees that the pension scheme won’t lose money.’
He said: ‘It doesn’t leave a lot of time, between the consultation and negotiations, for a ballot.
‘But we don’t accept the need to end final salary pensions.
‘We don’t accept the need for new entrants to not even be allowed onto a CARE scheme, they’re being offered some Mickey Mouse money purchase scheme.
‘Unless all this is withdrawn we won’t be recommending a “yes” vote on the proposals.’
Meanwhile, the reality is that Royal Mail has decided to close the existing final salary scheme to new members at the end of January and for all members at the end of March.
Existing members are to be moved to a CARE scheme on April 1, 2008.
In the face of this, the CWU London Divisional Committee (LDC) has produced a disorientating and confused pamphlet, central to which is that it is not prepared to defend the existing final salary scheme.
It has issued a four-page brochure correctly stating ‘There is no time to lose! It’s time to fight to safeguard your pension’.
But the content of the brochure undermines this call to action.
The LDC begins by asking: ‘Why does Royal Mail need to change the pension scheme?’
It answers: ‘Royal Mail has argued that the final salary pension scheme leaves them at the mercy of increased longevity rates and the performance of investments.
‘They point out that currently they have to pay £260 million per year to pay off the deficit to the pension scheme which equates to 10 per cent of pensionable pay.’
The LDC then proceeds to elaborate Royal Mail’s plans for ending existing postal workers’ pensions, making them work five years longer and closing off decent pensions for new workers.
The LDC states: ‘What are Royal Mail’s proposals for our pension scheme?
‘In essence, Royal Mail’s proposals are:
a) An increase in the normal retirement age from 60 to 65 with effect from 1st April, 2010.
b) Changing from a final salary scheme to a CARE scheme from 1st April, 2008.
c) Closing the existing scheme to new members from the end of January 2008.’
The brochure claims Royal Mail’s plans have been modified by the efforts of the CWU bureaucracy.
It states: ‘As a result of discussions with the CWU they are also committed to the following:
1) That pensionable service before 1st April 2008 will continue to be calculated based on the final salary scheme.
2) That a CARE scheme would be in place from 1st April 2008 with future service being subject to an annual indexation tied to RPI and capped at five per cent.
3) That normal retirement age would increase to 65 with effect from 1st April 2010.
4) AVC arrangements would be available for those who wish to increase their contributions to mitigate the effect of the changes.
5) That a high quality defined contribution scheme will be put in place for new joiners after 31st January 2008. There will be a one year waiting period for employees eligible to join the scheme.’
Referring to the national CWU position following last year’s pay strikes, the LDC document insists: ‘Contrary to what has been speculated, the CWU have not agreed these pension changes.
‘In fact, the joint statement only refers to the CWU agreeing to the consultation process and not the outcome of it.
‘The CWU nationally have said it would be inconceivable and unacceptable that further negotiations would not take place once the pension consultation process closes on the 16th January.’
However, the LDC admits: ‘It is also fair to say that the CWU is supporting pension change as it recognises that in the commercial environment Royal Mail now operates it has to be able to invest money to be able to beat the competition as well as investing in members’ terms and conditions.
‘Having to pay an extra £260 million per year for the next 17 years is going to cripple Royal Mail financially.’
The document continues: ‘We know that some have criticised the CWU for supporting pension reform but’, it claims, ‘the pension scheme can be reformed and made safer without agreeing to Royal Mail’s pension proposals’.
The LDC states: ‘Royal Mail wants to replace the final salary scheme with a CARE scheme. Below is a background to what a CARE scheme is.
‘In 1987, less than one per cent of the UK occupational schemes were in a CARE scheme and this remained the case until 2000.
‘Since 2000, however, companies like British Airways, the BBC, Sainsbury, Tesco, ITV and the Nationwide Building Society have closed their final salary schemes to new entrants and replaced them with CARE.
‘Unlike what Royal Mail is proposing, these companies did not close their final salary scheme to current members of the scheme.
‘Just as significant is that these companies introduced a CARE scheme for new entrants, whereas Royal Mail wants to introduce an inferior defined contribution scheme for new entrants.
‘How does a CARE scheme work?
‘The CARE scheme will work by Royal Mail calculating your pensionable earnings each year which increase by the rate of inflation (to a maximum of five per cent for each year). Therefore, in essence you build up a slice of your pension each year.
‘So what is better – a final salary scheme or a CARE scheme?
‘Without a doubt the final salary scheme is better than a CARE scheme.’
The document proceeds: ‘What is London’s preferred option?
‘Our preferred option is easy to write but much harder to win and that is to maintain the final salary even if some of the other issues, including the retirement age, were amended.’
Instead of proposing strike action, the LDC argues: ‘The only way we can safeguard the final salary scheme is if we were to successfully lobby the government.
‘This would mean we would have to force our National leadership to run a political campaign the like of which we have lacked for some years, to force the government to allow a different use of the escrow money and perhaps the use of assets held by Royal Mail Property Holdings to cut the deficit.
‘Even if we did launch such a campaign there is no certainty that John Hutton, Secretary of State at the Department for Business, Enterprise and Regulatory Reform, given his evidence to the Select Committee, would concede on this issue.’
The LDC brochure then asks: ‘What is plan B?’
Its answer: ‘Quite simply, plan B would be to make the CARE scheme as good a scheme as possible in the event that we could not force the employer to maintain the final salary scheme.’
The brochure says in its ‘Conclusions’: ‘All London Branches representing over 15,000 workers have rejected Royal Mail’s plans to worsen our pension benefits.
‘All London Branches are united in safeguarding our pension benefits.’
But it continues: ‘The Union are not dinosaurs and are not saying that the status quo has to be maintained on pensions.
‘However, we cannot, as a Union, stand idly by and allow Royal Mail to be one of the only employers who have closed the final salary scheme for existing members.
‘As your elected London Officials we intend to do everything in our power to campaign and change Royal Mail’s pension proposals which will see our members individually lose thousands of pounds.
‘However, it may take a further ballot for strike action to achieve our aims.’
The brochure’s last word is: ‘Finally, we would urge all members to support your Branch in fighting to save our pensions.
‘This will include filling out the postcards and petition as part of the consultation process.
‘There is no time to lose!
‘It’s time to fight to safeguard your pension.’
Clearly there is an urgent need to build a new leadership throughout the CWU, one that is prepared to call national strike action to defend the present final salary pension scheme, not give it up as the present national and London leadership is prepared to do.
I repeat, these leaders are not prepared to take strike action to defend the present final salary pension scheme, and no amount of twisting and turning must be allowed to disguise this fact.
These misleaders must be forced to resign, and the CWU national conference must be recalled to force through their resignations, and to mobilise the entire membership for national strike action.
CWU members want to defend the present final salary scheme.
They do not want to see it destroyed.
They are willing to fight to defend it, because at the least they will lose many thousands of pounds if it is destroyed or handed over as the CWU leaders are prepared to do.
These leaders must be sacked and replaced by a new leadership.
