The Trustee of the Royal Mail Pension Plan (RMPP) acknowledges the Government’s legally binding agreement with EP Group regarding its takeover bid for IDS.

Our primary focus is the protection of RMPP’s 123,000 members and the Trustee is pleased that it has reached agreement with EP Group to preserve the current governance structure of the Plan for a period of five years, subject to remaining required approvals being completed.

This undertaking gives the Trustee and members confidence that the necessary expertise and independence will remain on the Trustee board. This in turn provides the necessary stability for the Trustee to continue to look after members’ interests going forward.

The Trustee looks forward to continuing to engage with IDS and EP Group, should the takeover complete, and working to maintain the current healthy funding position of the Plan and to safeguard its future stability.

Please be assured that there is no change to your benefits and there is no action that you need to take. 

Since the possible offer for IDS by EP Group announced on 17 April 2024, the Trustee has been actively engaging with EP Group to seek a legally binding commitment to preserve the current governance structure of the Plan.

As a result of these discussions, the Trustee has reached agreement with EP Group to preserve the current governance structure of the Plan for a period of five years, subject to the takeover being approved and completed.

This undertaking gives the Trustee, and members, confidence that, should the takeover complete, the necessary expertise and independence will remain on the Trustee board, irrespective of a change of owner. This in turn provides the necessary stability for the Trustee to continue to look after members’ interests going forward.

Please be assured that there is no change to your benefits and there is no action that you need to take.

None of the statements in this announcement, or any of the contractual commitments from EP Group to the Trustee referred to above, are “post-offer undertakings” for the purposes of Rule 19.5 of the Takeover Code.

Royal Mail Pension Plan (RMPP, the Plan, which manages circa £10 billion of assets on behalf of over 123,000 members across the UK, confirms the appointment of Michael Airey as Chief Executive Officer. He has taken up the role replacing Richard Law-Deeks who stepped down in June after six years in the role.

With more than a decade of specialist experience in the pensions industry, Michael has served as Head of Actuarial at RMPP since 2019, and more recently as Head of Funding and Investment following the outsourcing of OCIO services to Blackrock in 2023. Prior to this, Michael was a Plan Secretary for the Senior Executive Plan at Royal Mail Pension Trustees and has worked on a range of projects on both Post Office and Royal Mail sections of the Plan. Before joining the Plan in 2016, Michael worked at Willis Towers Watson as an Actuarial Consultant and is a Fellow of the Institute of Actuaries.

Commenting on the appointment, Joanna Matthews, Chair, Royal Mail Pensions Trustees Limited, said:

“Michael understands the demands and challenges that the plan faces, having worked with the Trustee executive over the past 8 years. This means his is well-placed to build on what has been achieved so far and maintain our momentum. I look forward to working with him in 2024 and beyond.

“On behalf of the Trustee, I would also like to thank Richard Law-Deeks for his considered stewardship during his tenure as CEO. He leaves the Plan in good health and can be very proud of the strong team he leaves in place.”

Commenting on his appointment as CEO, Michael Airey said:

“It is a real privilege to lead the Plan in this next and important chapter, continuing the great work of Richard and the team. I look forward to working closely with Joanna, the trustees, and the sponsors to ensure the interests of our members remain well-served regardless of the prevailing economic and external environment.”

Since the possible offer for IDS Plc (IDS) by EP Corporate Group (EP Group) announced on 17 April 2024, the Trustee has been actively engaging with IDS and EP group to understand the potential implications for the company and the Royal Mail Pension Plan (the Plan). 

In these discussions the Trustee is seeking, among other things, a legally binding commitment to preserve the current governance arrangement of the Plan. This would give the Trustee, and members, confidence that the necessary stability, expertise and independence remain in place for the Plan. 

Discussions with EP Group are ongoing, and the Trustee continues to seek to achieve a satisfactory long-term governance agreement within the offer period. 

Please be assured that there is no change to your benefits and there is no action that you need to take.

The Trustee has noted the formal cash offer made by EP Corporate Group for IDS (the parent company for Royal Mail Group), which the IDS Board have recommended to shareholders. The Trustee also notes the terms and conditions attached to the agreement and is reviewing these, in detail, with its advisers.

Please be assured that there is no change to your benefits and there is no action that you need to take.

The Trustee’s priority is to ensure that members’ interests are protected and we are actively engaging with IDS, and taking independent advice to understand any implications for the Plan. We now look forward to a constructive dialogue with the bidder.

The Trustee has noted the revised potential cash offer made by EP Corporate Group for IDS (the parent company of Royal Mail Group), which the IDS Board have signalled they are minded to recommend. The IDS Board has now agreed to an extension of the deadline for discussions so as to explore the offer in further detail.

Our priority is to ensure that members’ interests are protected and we are actively engaging with IDS, and taking independent advice to understand and assess the implications for the Plan of this revised potential offer. Please be assured that the benefits you have built up are protected and are not changing.  There is no action that you need to take.

The Trustee has noted the public statement made by EP Corporate Group in relation to its non-binding indicative proposal to the Board of IDS for a possible cash offer. We continue to actively monitor the situation to ensure that members’ interests are protected.

From time to time we send you a payslip showing the amount of your pension and any deductions (such as tax). We usually only do this if the amount of your pension payment changes by more than £1.00.

We are updating the system we use to make pension payments, and this means that in future any payslip we send you will look different from before. We are sending a payslip to everyone who receives a pension in December, in the old format, to make them aware of the change.

Click here to see an example of what the payslip will look like. Everyone will get a payslip in the new format in April 2024. After that, for most people we will only send a payslip after each annual pension increase is paid – usually in May.

Nothing else is changing – we’ll continue to pay you on the last working day of each month (if you are paid monthly) or the last working day of March, June and December (if you are paid quarterly).

The Trustee has agreed to a request from Royal Mail Group (RMG) to release some money that has been held separate from the RMPP. The release to RMG of the escrow funds (valued at £196m on 26 March 2023) was agreed after fully assessing the risks of the RMPP and an independent review of the information made available by RMG. It will enable RMG to fund a one-off lump sum payment to all employees as part of its agreement with CWU. The remainder of the escrow, £70m, will be made available to the planned Royal Mail Collective Pension Plan when it is launched, expected early next year.

The escrow was established in 2017 as a potential source of additional funds for the Plan should they be required. Since then, the funding position of the RMPP has improved considerably as a result of the Trustee’s prudent investment strategy.

The Trustee’s duty to safeguard the security of members’ benefits is their primary focus. RMPP is now well-funded and the Trustee is confident that members’ interests are well protected, even after the release of the escrow funds.

Benefits building up in the RMPP after 1 April 2018 are normally increased each year in accordance with a policy set by Royal Mail Group (RMG). This is based on market conditions from time to time, but the aim is to provide an above inflation increase. We’re pleased to advise that the benefits built up in the Cash Balance fund as at 31 March 2022 for current employees (or those who left since 1 April 2018) were increased on 1 April 2023 by 11.3%. This met RMG’s aim of providing an increase above inflation (based on the CPI measure of 10.1%).

Members of the current RMPP investment team will move to BlackRock to continue to deliver the investment strategy, ensuring stability and continuity.

The RMPP has a wide range of investments, or assets, which are managed to support the retirement benefits of our members.

In the past, the Trustee has managed these investments in-house, through a small team headed by our Chief Investment Officer. Now, the Trustee has selected BlackRock to manage its assets as an outsourced chief investment officer (OCIO). This means that some members of RMPP’s investment team will move to BlackRock and continue to manage the scheme’s investments. In doing so the RMPP will benefit from a range of expertise available from a full-service asset manager.

Richard Law-Deeks, Chief Executive of the RMPP said: “The Trustee’s main priority is to ensure the retirement benefits of our members are well managed and protected. Our in-house team has delivered strong investment performance during some challenging times and the RMPP is well-funded. It’s time to consider how to lock and maintain this position. This agreement ensures we retain the expertise of key members of the team, while at the same time benefitting from BlackRock’s wider resources.”

The recent turmoil in UK financial markets impacted defined benefit pension schemes with investment strategies designed to protect against interest and inflation rate movements. The RMPP has taken actions to protect the plan and ensure that your benefits remain secure, and the strong funding level has been maintained. We haven’t needed to request additional funds from Royal Mail Group, beyond the normal monthly employer contributions, as required under the Plan Rules.