ROYAL Mail pension fund assets and liabilities are expected to be transferred to the government next month, meaning staff will have a state guarantee of their retirement benefits.
Reports suggest the transfer is subject to approval by the European Commission, which is expected to confirm next week whether it breaches state aid rules.
The likely change will add £28bn of assets to the Government’s books, allowing the chancellor to cut the annual deficit and lower borrowing costs.
The decision to nationalise the pension fund may also pave the way for the eventual privatisation of the Royal Mail, as a buyer would not be taking on extensive pension liabilities.
While the £28bn asset windfall will be a welcome boost for the Exchequer, the scheme has liabilities of £37bn, and the £9bn shortfall will have to be made up by taxpayers over the next 30 years as postal workers gradually retire.
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Treasury estimates suggest the payments will raise annual public sector expenditure and public sector net borrowing over time by between £1.3bn and £1.6bn.
The Communication Workers Union (CWU), which represents postal workers, said the government’s adoption of Royal Mail's pension liabilities was a great success.
“We've been campaigning for this for years,” a spokesman told the BBC.
“When we first suggested it, we were laughed at. It's important that pensions are protected.”
However, the CWU remains opposed to privatisation.
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“It's not in interests of the public, customers or postal workers,” the spokesman said.
“Why nationalise the debt and privatise the profits?”