The assets and liabilities of Royal Mail’s pension fund will be transferred to the Government next month, according to reports.
Subject to EU approval, the Government will take on £28bn of assets in the deal which would provide a quick windfall for the Government coffers. But it will also take on £37.5bn of liabilities which will only show up in the Government’s books over the next 20 or 30 years.
The move is seen as a step towards privatisation of the service.
According to the BBC, the pension liabilities are treated similarly to the unfunded pension schemes of the National Health Service or armed forces, and are not considered an immediate Government debt for accounting purposes.
The European Commission is considering whether the move would break state aid rules and is expected to announce a decision this week.
The transfer has been backed by the Communication Workers Union.
The Institute of Economic Affairs says the move is dangerous and short-sighted. Editorial director Philip Booth says: “The assets will be used immediately to reduce the Government’s debt whilst the liabilities – made up of future pensions to workers – will no longer be funded and will have to be met by future generations of taxpayers.”