Royal Mail Group PLC (LON:RMG) saw its shares fall today after the Communication Workers Union (CWU) last night announced that its members have overwhelmingly voted to support industrial action over changes to the mail delivery firm’s pension scheme.
In late morning trading, Royal Mail shares – which were surprisingly demoted to the FTSE 250 index from the FTSE 100 last month - were down 2.8%, or 10.6p at 373.6p.
READ: Royal Mail shares fail to deliver amid continuing disappointment at FTSE 100 demotion, growing strike concerns
In a statement, the firm said: “Royal Mail is very disappointed by the announcement that CWU members have voted (89 per cent Yes) in favour of taking industrial action. However, we note that with a 74 per cent turnout - and taking into account frontline employees who are not union members (18,000) - 57 per cent have backed a strike.”
They added: “A ballot result for industrial action does not necessarily mean there will be industrial action. Royal Mail is committed to further talks as a matter of urgency, to reach agreement with the CWU. There are no grounds for industrial action. We want to reach agreement.”
The firm has already announced that its Defined Benefit Pension Scheme would close to future accrual from 31st March 2018, with proposals made for a new scheme to be introduced to provide the potential for combined employee and employer pension contributions of nearly 20%.
Delivering on changes proving more challenging
Nathan Long, senior pension analyst at Hargreaves Lansdown commented: “Royal Mail’s decision to close their defined benefit pension scheme is entirely in keeping with many employers keen to cap the uncertainty of future pension payments.
“Delivering on these changes is proving more challenging, with the threat of industrial action now hanging over the busy Christmas period.”
He noted: “Two replacement schemes have been tabled. Both offer generous pension contributions in comparison to most employers.
“Whilst the pension benefits are undoubtedly being watered down, a first class retirement is still available for staff who maintain membership throughout their working life.’