(Reuters) – Britain’s Royal Mail (RMG.L) and the Communications Workers Union (CWU) mentioned on Thursday they’d reached an settlement to finish a virtually 10-month dispute over plans to exchange the agency’s outlined profit pension scheme, sending its shares greater.
Royal Mail, which has 142,000 workers in Britain, reached an settlement over pensions, pay, a shorter working week, tradition and operational modifications, it mentioned in an announcement.
The company’s shares have been up 6.6 % by 1553 GMT.
The CWU has been at odds with Royal Mail since final April over its plans to exchange the outlined profit pension scheme and had threatened to strike if an settlement couldn’t be reached via mediation.
Royal Mail expects the general money price to the company of the proposed new pension preparations will proceed to be round 400 million kilos a 12 months, the company mentioned.
Without modifications, contributions have been anticipated to rise to 1.26 billion kilos, it mentioned.
Under the settlement, the prevailing pension plan will shut on March 31 and a brand new “collective defined contribution” (CDC) scheme arrange.
Royal Mail, privatised 4 years in the past, is likely one of the few large British corporations nonetheless to have a defined-benefit pension scheme, which pays out a proportion of a member’s remaining wage relying on how lengthy workers have paid in to the scheme.
By distinction, an outlined contribution scheme is a retirement plan during which the employer and worker contribute to an funding fund that’s used to purchase a pension on retirement.
Under a collective scheme, contributions are pooled, as an alternative of being held in a person account, serving to to share danger.
Royal Mail mentioned it and the CWU would foyer government to make mandatory legislative and regulatory modifications so a CDC scheme could possibly be arrange.
The settlement features a 5 % pay hike for Royal Mail workers from October 2017 and a one-hour discount to the working week from October 2018.
From April 2019, there will likely be a 2 % enhance in pay, and an extra one-hour discount to the working week from October 2019, Royal Mail added.
The pay rises and cuts in working hours are topic to effectivity initiatives being carried out, Royal Mail mentioned.
The deal, which was unanimously agreed by the CWU’s Postal Executive, will now be advisable to the union’s 110,000 postal members in a forthcoming nationwide poll, CWU mentioned in an announcement.
The company added it now expects to ship adjusted working revenue, earlier than transformation prices, of not less than 680 million kilos for 2017-2018.
Reporting By Justin George Varghese in Bengaluru; Editing by Saumyadeb Chakrabarty and Adrian Croft