Those who think that Daniel Křetínský’s bid for his EP Group (Bidco) to take over Royal Mail and stop the CDC scheme had best read the small print of its offer for IDS (Royal Mail’s parent).
The RMCPP is the Royal Mail Collective Pension Plan – the CDC Plan.
In the short-term , the CDC plan is being delayed again – but the future of the plan – for a minimum of two years, is guaranteed by the terms of Křetínský’s offer.
Royal Mail and Government have independently said the CDC will launch this year and it is important for both that it does. It is equally important for those who want to see other CDC deals, for if Royal Mail fails, the flag is lowered from the mast.
Royal Mail Pension Plan’s surplus
I was also encouraged to read in the bid document this.
There are still 110,ooo postal workers at Royal Mail, most members of the Communication Workers Union , some of Unite. The collective strength of the unions is recognised as is their wish that the substantial surplus in the Royal Mail Defined benefit pension plan (RMPP) is not spent (in the next two years) on Royal Mail but kept in a trust for the members.
No safeguard lasts for ever (Daniel Křetínský) told the FT last year he was content with a minority holding, but the Bid document gives Royal Mail, their members (and representatives) and the scheme trustees , time to work out a long-term plan that secures not just the Pension Plans, but the jobs that make them worthwhile.
It’s well known that I am a big fan of the CDC plan, of Terry Pullinger and Jon Milledge who negotiated it and for the advisers and the corporate team at Royal Mail who have designed it. It is not a template for CDC as a whole but it is the bulwark behind which other schemes can be deployed.
In my view, the “wage for life” mentality that persists at Royal Mail , six years after the announcement that the CDC scheme would be coming, is testament to the strength of feeling among the workforce that they want pensions not pots and I am very pleased to be reading the terms of the bid document.
Pensions are not the problem at Royal Mail, with determination from all parties, they can be part of the solution. We want a universal postal service and a profitable one. To use the words of Křetínský, quoted in yesterday’s FT (alongside Peel Hunt’s Alexander Paterson).
“From here on in, the one thing that is going to worry whoever is in the next government is” the strength of Křetínský’s commitments and the limits on their duration, said Paterson, who also pointed to a time-limited commitment not to raid Royal Mail’s pension surplus.
Křetínský stressed that although investors typically only give commitments for up to five years in company takeovers, he intended “most of these commitments [to be] super-long-lasting”. “I can tell you that as long as I am alive . . . you can call me on those,” he added.
Let’s hope that Royal Mail’s 110,000 workers – will.
