Update on Pension Valuation & 2018 Pension Review

RNS Number : 4606E

Royal Mail PLC

08 May 2017

 

Royal Mail plc

8 MAY 2017

OUTCOME OF MOST RECENT ROYAL MAIL PENSION PLAN VALUATION

AND

UPDATE ON 2018 PENSION REVIEW

Royal Mail plc (RMG.L) today announces 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, the Company 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.

This announcement contains inside information

ENDS

Investor Relations:

Catherine Nash

Phone: [phone]

Email: [e-mail]

Media enquiries:

Peter Tilley

Phone: [phone]

Email: [e-mail]

Royal Mail press office out of hours: 020 3338 1007

About Royal Mail

Royal Mail plc is the parent company of Royal Mail Group Limited, the leading provider of postal and delivery services in the UK and the UK's designated universal postal service provider. UK Parcels, International and Letters ("UKPIL") comprises the company's UK and international parcels and letters delivery businesses operating under the "Royal Mail" and "Parcelforce Worldwide" brands. Through the Royal Mail Core Network, the company delivers a one-price-goes-anywhere service on a range of parcels and letters products. Royal Mail has the capability to deliver to more than 29 million addresses in the UK, six days a week (excluding UK public holidays). Parcelforce Worldwide operates a separate UK network which collects and delivers express parcels. Royal Mail also owns General Logistics Systems (GLS) which operates one of the largest ground-based, deferred parcel delivery networks in Europe.

Disclaimer

This announcement contains certain statements that constitute "forward-looking statements". Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause actual results to be materially different from those expressed or implied by such forward-looking statements. Persons receiving this release should not place undue reliance on any forward-looking statements.

The Group disclaims any obligation or undertaking to update or revise any forward-looking statements contained in this announcement to reflect any change in its expectations or any change in events, conditions or circumstances on which such statements are based unless required to do so by applicable law, the Prospectus Rules, the Listing Rules or the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority.

 

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