Households pay tab for £50bn of posties’ pensions

Taxpayers are ready for more than £50bn in postal workers’ pensions, The Mail on Sunday can reveal.

The liabilities were surreptitiously dumped on the state when Royal Mail was privatized a decade ago under the government of David Cameron, who was accused last night of ‘a deplorable sleight of hand’.

Royal Mail, since renamed International Distribution Services, went public in 2013. But the share price has fallen amid strikes costing it more than £1 million a day.

The potential bill to cover future pensions has soared from £38bn to £51bn since privatisation. Former Chancellor George Osborne used the assets of the Royal Mail pension fund to reduce the government’s short-term debt.

This raised £17 billion. But a large chunk of Royal Mail’s assets – government bonds known as gilts – were returned to the Treasury for free, leading to a loss of £11bn for the taxpayer.

“The government’s takeover of the Royal Mail pension fund to facilitate privatization was a regrettable ploy,” said Neil Record, president of the Institute of Economic Affairs. Removing old pension costs from Royal Mail’s balance sheet made the stock more attractive to investors. But it also made the company more vulnerable to predators, as a large pension fund deficit would have served as a “poison pill.”

Czech magnate Daniel Kretinsky has built up a 23 percent stake in Royal Mail. He is rumored to be plotting a break-up splitting off the profitable European parcels business from the loss-making parcels and letters business.

The pension liabilities of the largest public sector schemes exceed £2 trillion – almost as much as the total annual output of the UK economy. “All of this will have to be paid for by future taxpayers,” Record said.

A government spokesman said: ‘The decision to take responsibility for the Royal Mail Pension Plan has successfully secured the safety of the fund for workers and facilitated investment in the private sector.’