Royal Mail Group’s (LON:RMG) pension bill to be footed by the taxpayer soared by £8.5 billion over the last year, City A.M. has reported. The news comes as the privatised postal operator continues to look for a solution for its pension plan, having signalled that its defined benefit scheme is unaffordable beyond next year.
Royal Mail’s share price has fallen into the red in today’s trading, having lost 1.07 percent to 395.86p as of 10:35 BST, largely in line with losses in the broader London market, with the benchmark FTSE 100 index currently standing 1.14 percent in the red at 7,305.89 points. The group’s shares have lost more than 23 percent of their value over the past year, and are down by some 14 percent in the year-to-date.
City A.M. reported last night that the government had disclosed that Royal Mail’s pension liabilities to be covered by the taxpayer had soared by £8.5 billion to £46.8 billion over the last year. The taxpayer was left with responsibility for pre-2012 benefits paid into the group’s pension fund as part of the postal operator’s privatisation in 2013. Benefits accrued thereafter are the responsibility of a separate scheme run by Royal Mail itself.
The news comes as the FTSE 100 group continues to struggle with its pension scheme, having signalled that it is unaffordable beyond next year. Royal Mail’s main trade union, the Communication Workers’ Union, has pledged to challenge the closure and City A.M. notes that it is understood that unless a deal is reached this month, the union will ballot its members for strikes.
The 15 analysts offering 12-month price targets for Royal Mail for the Financial Times have a median target of 450.00p, with a high estimate of 590.00p and a low estimate of 350.00p. As of August 4, the consensus forecast amongst 17 polled investment analysts covering the blue-chip group advises investors to hold their position in the company.