Royal Mail plc (LON:RMG) today announced that the most recent valuation of the Royal Mail Pension Plan (the Plan) has been completed.
Under the assumptions used for the valuation, as at 31 March 2015, the Plan had assets of £6,153 million and liabilities of £4,451 million. Using these assumptions, the cost of benefits being accrued each year, based on market conditions at the end of March 2017, would currently be around £1.3 billion. This is significantly greater than the total annual contributions of around £400 million that the Company and employees make. Accordingly, we expect that the actuarial funding surplus would be exhausted during 2018 if the Plan had remained open in its current form. After this time, the annual cost would be more than double the current contributions, which, as we have pointed out to Plan members in a number of communications, is unaffordable for the Company.
In accordance with the new Schedule of Contributions, the Company contribution rate will remain at 17.1% of members’ pensionable pay until 31 March 2018. Given the Plan was in surplus at the valuation date, no deficit correction payments are required.
Following Trustee approval, Royal Mail plc confirms that the Plan, in its current form, will close to future accrual on 31 March 2018. We continue to work closely with our unions on a sustainable and affordable solution for the provision of pension benefits after 31 March 2018.
