Sept 5 (Reuters) - Britain’s Communications Workers Union (CWU) will ballot more than 100,000 of its members working for Royal Mail Plc over industrial action, it said on Tuesday.
The CWU has opposed Royal Mail’s move to replace its defined benefit pension scheme, saying it would result in members losing up to a third of their future pensions on average.
“Royal Mail is very disappointed that the CWU has announced it will issue a formal notice to ballot for industrial action. We believe there are no grounds for industrial action,” the company said in a statement.
British companies are facing increasing costs to fund pensions as people live longer and investment returns on bonds have fallen and are expected to remain low.
“Talks have been taking place since April 2016, but the sense of shared purpose has drifted as privatisation has evolved,” CWU Deputy General Secretary Postal Terry Pullinger said in a statement.
Royal Mail was privatised four years ago and is one of the few big British companies to still have a defined benefit plan.
The company wants to replace it with a modified defined benefit or contribution pension scheme. It says this would cost about 400 million pounds ($520 million) annually, compared with more than 1 billion pounds for the existing scheme.
Around 90,000 Royal Mail workers are in a defined benefit scheme, which pays out according to workers’ final salary and length of service. Its closure to new members in 2008 resulted in about 40,000 workers joining a defined contribution plan.
Royal Mail has refused to change its core terms, saying it pays its employees 45-50 percent more than the National Living Wage, which is 7.5 pounds for workers aged 25 and over.
However, CWU General Secretary Dave Ward has said that the union would take all necessary steps to protect and enhance the terms and conditions for its members.
Royal Mail’s shares closed down 0.28 percent at 385 pence per share. ($1 = 0.7682 pounds) (Reporting by Sanjeeban Sarkar in Bengaluru; editing by Alexander Smith)