Royal Mail share price: Group launches pension plan consultation

on Jan 5, 2017
Updated: Oct 21, 2019

Royal Mail Group (LON:RMG) is launching a consultation process with the members of its pension plan, the blue-chip company has said. The move comes with the privatised postal services operator having warned that its defined benefit pension scheme, which guarantees a retirement income to members, is unaffordable beyond 2018.

Royal Mail’s share price meanwhile has fallen deep into the red in London this morning, having shed 1.32 percent to 457.60p as of 09:13 GMT, and underperforming the blue-chip FTSE 100 index which has climbed marginally into positive territory and is currently 0.18 percent better off at 7,202.85 points. The group’s shares have gained about 4.7 percent over the past year, compared with a 17.4-percent rise in the Footsie.

Royal Mail announced in a short statement this morning that it had started a consultation process with the active members of its pension plan and its trade unions about the group’s proposal for the future of the plan from April next year. The move is part of the 2018 pension review process which the company is undertaking with its unions. The consultation is scheduled to end on March 10.
“No decisions will be made until the consultation process is completed,” Royal Mail pointed out in the statement, adding that it will write to members once it has made a decision. The consultation comes with the privatised postal operator trying to cut benefits over the future, having warned that its defined benefit pension scheme is unaffordable beyond 2018.
The 14 analysts offering 12-month price targets for Royal Mail for the Financial Times have a median target of 506.63p on the stock, with a high estimate of 625.00p and a low estimate of 390.00p. As of December 24, the consensus forecast amongst 17 polled investment analysts covering the postal operator advises investors to hold their position in the company.
As of 09:20 GMT, Thursday, 05 January, Royal Mail share price is 457.60p.

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