Royal Mail share price: MPs back group’s pension scheme

CDC plans could “transform the UK private pensions landscape”

Royal Mail share price: MPs back group’s pension scheme

MPs are urging the government to move quickly to draw up rules paving the way for a new type of pension scheme being pioneered by Royal Mail Group (LON:RMG), The Times reports. The privatised postal operator agreed a pension deal with the Communication Workers Union (CWU) earlier this year.

Royal Mail’s share price rose in the previous session, adding 0.33 percent to close at 487.10p. The stock marginally outperformed the broader UK market, with the benchmark FTSE 100 index ending the session 0.14 percent higher at 7,661.87 points.

MPs back pension scheme

The Times reported this morning that according to a report from the work and pensions committee that collective defined contribution (CDC) or Dutch-style schemes could “transform the UK private pensions landscape,” potentially providing more generous retirement incomes than conventional defined contribution schemes for the same cost through the pooling of risk between generations.

Royal Mail agreed a  CDC scheme deal with the CWU earlier this year and is now awaiting the necessary rule changes before it can go ahead. 

“As well as a model of constructive industrial relations, Royal Mail could act as a model for new collective pension schemes,” the committee said, as quoted by the newspaper. “It is opening the door for CDC to move from abstract idea to practical reality.”

Analysts on Royal Mail

Royal Bank of Canada hiked its rating on the company to ‘sector performer’ last month, with a price target of 500p on the shares. According to MarketBeat, the postal operator currently has a consensus ‘hold’ rating and an average price target of 480.08p.

Liberum meanwhile expects uncertainty from the recently introduced General Data Protection Regulation (GDPR) rules to dampen marketing communications activity. The comments come ahead of the privatised postal operator’s trading update tomorrow.

As of 08:09 BST, Monday, 16 July, Royal Mail share price is 487.10p.

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