Pensions for Royal Mail staff will be slashed unless they work five years longer, according to a leaked proposal.

According to the story reported by the Daily Mirror, the move would cost members of the scheme thousands of pounds a year whilst some would see their retirement funds slashed by as much as half. The plans would also mean that final salary schemes would be closed to new members from next year.

The move is designed to stem a £6 billion shortfall in the pension fund by saving £1.5 billion over five years.
Dave Ward, deputy general secretary of the Communication Workers Union (CWU), said: “This is a savage attack on pay and conditions. Our members aren’t going to roll over and accept this. It will only galvanise support for strike action.”

The age staff could retire with full pensions would be raised from 60 to 62 next year and 65 from 2010. Future rises in pensionable pay would be capped at the inflation rate and lump sum payments would also be hit, said the paper.

Reacting to the leaked report, Jon Millidge, director employee relations of the Royal Mail who was said to be ‘deeply disappointed’ by the situation, released a copy of his letter to the CWU: “Clearly it would seem there has been a breach of trust by the CWU and the article – and the union’s comments in it – are in great danger of misleading our people on what is a very important issue for them.”

Millidge said that the leaked proposal was one of many that were looked at considered and rejected. “The company has already made it very clear that our number one priority is to protect as far as possible the pension provision for our existing employees.”

The Royal Mail pension scheme is one of the UK’s biggest with more than 450,000 members.