Hefty: Royal Mail pension liabilities
Taxpayers are on the hook for more than £50billion of postal workers’ pensions, The Mail on Sunday can reveal.
The liabilities were stealthily dumped on the state when Royal Mail was privatised a decade ago under David Cameron’s government, which was last night accused of ‘a deplorable sleight of hand’.
Royal Mail, since renamed International Distribution Services, was floated on the stock market in 2013. But its share price has slumped amid strikes that are costing it more than £1million a day.
The potential bill to meet future pensions has soared since privatisation from £38billion to £51billion. Former Chancellor George Osborne used the Royal Mail pension fund’s assets to reduce short-term Government debt.
This netted £17billion. But a big chunk of Royal Mail assets – Government IOUs known as gilts – were given back to the Treasury for free, leading to an £11billion loss for taxpayers.
‘The Government takeover of the Royal Mail pension fund to allow the privatisation was a deplorable sleight of hand,’ said Neil Record, chairman of the Institute of Economic Affairs. Removing legacy pension costs from Royal Mail’s balance sheet made the shares more attractive to investors. But it also made the company more vulnerable to predators because a big pension fund deficit would have acted as a ‘poison pill’.
Czech tycoon Daniel Kretinsky has built up a 23 per cent stake in Royal Mail. He is rumoured to be plotting a break-up that would involve splitting the profitable European packages division from the loss-making parcels and letters.
The pension liabilities of the largest public sector schemes exceed £2trillion – almost as much as the total annual output of the UK economy. ‘All of this will have to be paid by future taxpayers,’ said Record.
Government spokesman said: ‘The decision to assume responsibility for the Royal Mail Pension Plan successfully secured the safety of the fund for employees and facilitated private sector investment.’
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