Part-privatisation of Royal Mail will save pensions, says chief

According to Royal Mail’s pension scheme trustees, the pension fund is at risk unless action is taken to part-privatise the group.

Jane Newell, the trustees’ chairman, said the pension fund’s deficit may be “significantly larger” than the £5.9 billion estimated last year.

In a review of the business last year, the pension deficit was seen as the main problem hindering the business.

The group’s chief executive, Adam Crozier, warned of the group’s need for funds and its pension deficit and told The Times that it faces a “really bloody big problem.”

According to Mr Crozier, a surge in internet shopping and the increase in electronic communications means the postal service is going through significant change. By 2013, Royal Mail anticipates that three quarters of its profits will come from parcels rather than letters.

Mr Crozier told the Government that the business desperately needs equity capital and warned that if no action is taken to make group efficient, it will become loss-making next year.

Ministers want to sell a stake of 30% to the private sector to help fund the modernisation of the service. However, nearly 150 Labour MPs are against the part-privatisation of the group.

Proposals for the postal service are to be introduced in parliament tomorrow.

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