£28bn pension windfall to reduce deficit
Monday 19 March 2012
George Osborne will use a £28 billion windfall from the transfer to the state of Royal Mail pensions to reduce the deficit and not to pay for major projects, the Treasury said.
The cash bonanza is expected to become available within weeks - with officials confident the EU will approve the deal in time for the Chancellor to announce it in Wednesday's Budget.
Taking over the pension scheme - which has a near £10 billion deficit - is designed to make the organisation more attractive to investors as the Government seeks to privatise it.
Once completed, Mr Osborne will be able to sell off the billions of pounds worth of shares, bonds and properties that have been accumulated among the fund's assets.
Accounting rules mean however that the £37.5 billion liabilities will be absorbed into the rest of the state pension system and so won't immediately show on the Government books as debt.
The Chancellor was reported to be under pressure from Tory donors and backbenchers to splash the extra money on infrastructure projects such as roads, schools and power stations.
But the Treasury said it would go immediately to cut the UK's record deficit.
News that the transfer could happen within weeks was welcomed by the Communications Workers Union (CWU) which has campaigned for several years for the state to take over the pension.
A spokeswoman said: "This will protect the pensions of postal workers who have faithfully paid contributions for decades.
"We've consistently argued that the Government has a moral obligation to take on the pension deficit, partly as owner of the company and for allowing Royal Mail to take a 13-year contributions holiday.
"They laughed in our face when we suggested it so it's been a long journey getting here."
The union remains opposed however to the privatisation, which is not expected to happen this year.
Liam Neeson's Downton dreams
Thriller is set in the secret world of British espionage
Bomber jacket worn by Mary Berry sells out within an hour
Much-loved cartoon character returns - without Sir David Jason
Actress to appear in second series of the hugely popular crime drama
- 2 Scottish independence: What you shouldn't tweet about if you want to avoid jail today
- 3 Scottish independence: Five reasons Salmond is secretly hoping for a 'No' vote
- 4 Isis plan to 'behead random member of the public' in Sydney thwarted by Australian police
- 5 Scottish independence: Andy Murray backs Yes campaign in eleventh hour decision
Thailand beach murders: Thai PM suggests 'attractive' female tourists cannot expect to be safe wearing bikinis
Scottish independence referendum live: Latest news as Scotland votes Yes or No
Scottish independence: Final opinion polls show undecided voters could swing result either way
Scottish independence: Almost half of No voters have felt 'personally threatened' by the Yes campaign
Isis plan to 'behead random member of the public' in Sydney thwarted by Australian police
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
The political class is doing what Hitler couldn’t – destroying Britain
Scottish independence referendum: A nation divided against itself
Scottish independence: Nationalist leader Jim Sillars threatens pro-union companies with 'day of reckoning' after independence
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Unpaid Voluntary Position : Reach Volunteering: Promising volunteer Trustee op...
£30000 - £35000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...
£110 - £130 per hour: Randstad Education Reading: Psychology Teacher needed fo...
£85 - £120 per day: Randstad Education Cheshire: Randstad Education are curren...