Royal Mail pensions shortfall should not be funded by customers

The postal regulator has said that it is unlikely that Royal Mail will be allowed to increase the price of postage to cover its £4bn pensions shortfall. The organisation still has a final salary pension for its 196,000 employees.

Gregor McGregor, chief executive of industry regulator PostWatch, said: “In principle, it must be wrong for a regulator to allow pension deficits to be met from price increases only.

He said it had arisen largely as a result of a continuous 13-year pension ‘holiday’ when the company paid no contributions at all. This benefited its shareholder, the government.

“The deficit was therefore largely created by management decisions. Customers are not at fault and should not be expected to foot the whole bill,” he said.

A Royal Mail spokesman said: “We have always said that tackling the £4bn pension fund deficit is one of our major challenges.

“It is one element of our private discussions with the regulator on future prices and they will take a view.”

Reports in the Daily Mail suggested that the cost of first class postage could rise to 39p to help cover the shortfall.

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