Subject: Royal Mail has secured the money to fund a one-off lump sum payment expected to be at least £900 per employee
The Trustee of the Royal Mail Pension Plan (RMPP) has agreed to release to Royal Mail some money that has been held separate to the Pension Plan. We are going to use this to pay all employees of Royal Mail Group Ltd and Property and Facilities Solutions Ltd a one-off, lump sum payment which is expected to be at least £900 per employee (pro-rated for part-time employees).
This payment, which is subject to the ratification of the Business Recovery, Transformation and Growth agreement, will be in addition to the proposed pay offer agreed with the CWU. The exact amount will depend on the precise number of employees at the time of the payment.
It is being funded by money being held in something called an ‘escrow’. An ‘escrow’ is a legal arrangement where a third party holds assets or money on behalf of the other two parties until certain conditions have been met.
The escrow was established in 2017 as a potential source of additional funds for the Plan should they be required. Since the creation of the escrow, the funding position of the RMPP has improved considerably. RMPP is now well-funded and The Trustee is confident that members’ interests are well protected, even after the release of the escrow funds. The escrow was valued at £196m on 26 March 2023.
We are grateful to the Trustees for agreeing to release the funds which enables us to give an additional one-off lump sum payment during this difficult period given the current cost of living challenges.
Most of the money from the escrow will be used to fund the one-off lump sum payment expected to be at least £900 to all [Royal Mail Group Ltd and Property and Facilities Solutions Ltd] employees. The remainder of the escrow, £70m, will be made available to the planned Royal Mail Collective Pension Plan when it is launched early next year.
What happens next?
The release of the escrow is subject to final ratification of the agreement with the Communication Workers Union (CWU) in the member ballot. Once the agreement is ratified, all employees will receive the payment on 29 September and it will be subject to normal Income Tax and National Insurance deductions.