Employees at Royal Mail have voted in favour of strike action over pensions, with 73.7% of its union members voting and 89% backing a strike.

Royal Mail announced earlier this year it would close its current defined benefit (DC) scheme in March 2018

Although the pension fund is currently in surplus, Royal Mail, which was privatised in 2013, said its current annual contribution of £400m a year would increase to £1.26bn.

The Communications Workers Union (CWU), which has 110,000 members, said the vote was "sparked by the company's attack on the pension rights of hard-working postmen and women and the refusal of the employer to engage seriously over pay, working hours, future job security and the need to improve and grow the service to the public."

Royal Mail said the current scheme must be closed because it is unsustainable.

Douglas Hamilton, head of pensions strategy at Royal Mail, said its proposals are fair: "We have never hidden the fact from our DB scheme members that the benefits they build up from April 2018 will be smaller than they are now.

"The company cannot afford the plan in its current form, but with our current DB cash balance proposal we have moved a long way compared to the defined contribution (DC) proposal we originally put forward.

"This is not about cost-cutting - Royal Mail will continue to pay broadly the same in pension contributions after its proposed changes as it does now."

More than 60% of Royal Mail employees in the UK are in a DB pension scheme, while the figure for the UK private sector is under 5%.

In place of an existing defined benefit pension scheme, which provides a guaranteed income in retirement, Royal Mail is offering a different kind of DB scheme that instead gives employees a cash lump sum linked to the value of their contributions.

First published 05.10.2017

Lindsay.sharman@wilmingtonplc.com