Royal Mail Pension Transfer Boosts Treasury Coffers by £28bn
22 May 2012 (PLANSPONSOREurope.com) - The coffers of the UK Treasury have received a £28bn cash boost in a one-off transfer as part of the transfer of the Royal Mail Pension Plan.
The latest monthly report from the Office for National Statistics reveal the Treasury achieved a £16.5bn public sector net surplus in April.
Following Royal Assent for the Postal Services Act, on 13 June 2011 the Department for Business, Innovation and Skills (BIS) has begun the proposed transfer of assets and liabilities from the Royal Mail Pension Plan (RMPP) to a new government run unfunded public sector pension scheme. Under the terms of the Act, the government assumes both the RMPP pension liabilities, accrued up to March 2012, and the bulk of the RMPPs assets. These transactions took place in April 2012.
The value of the RMPP assets transferred amounted to £28bn, while the value of the transferred liabilities was roughly £38bn. Under UK rules, the pension liabilities of unfunded pension plans, like those for the Civil Service, are contingent liabilities and are therefore not recorded as liabilities in the National Accounts or Public Sector Finances. However, the report concedes the transfer of the assets provides the government finances with a one off boost in the short term, though government expenditure rises over the longer term as it pays out the pensions to retired Royal Mail workers.