£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.
- 1 Half of young women unable to ‘locate vagina’ and 65% find it difficult to say the word
- 2 Emma Watson on Jennifer Lawrence naked photo leak: 'Even worse than seeing women's privacy violated is reading the comments'
- 3 Saudis risk new Muslim division with proposal to move Mohamed’s tomb
- 4 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
- 5 Mexican woman becomes world’s 'oldest person' at 127
Perez Hilton apologises for publishing Jennifer Lawrence naked 4Chan photos
Jennifer Lawrence 'nude photo hacker' claims there are hundreds more celebrity images to come
Victoria Justice on naked photo leak: 'Let me nip this in the bud right now – pun intended'
Ariana Grande nude photos leak: Pictures are completely fake, say representatives
Saudis risk new Muslim division with proposal to move Mohamed’s tomb
Rotherham child sex abuse scandal: Labour Home Office to be probed over what Tony Blair's government knew - and when
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Ashya King: Parents of five-year-old boy refused permission to visit him in hospital and denied bail at Spanish court
With Douglas Carswell joining Ukip, my party has taken another giant step forward
When elitism grips the top of British society to this extent, there is only one answer: abolish private schools
Ashya King: 'Cruel NHS has not given us the treatment we need', says father of five-year-old with brain tumour who fled to Spain
£21000 - £35000 per annum: Randstad Education Cambridge: Maths teachers requir...
£35000 - £38000 per annum + benefits: Ashdown Group: Executive Assistant/Event...
£23760 - £33600 per annum + pre 12 week AWR : Randstad Education Manchester Se...
£21000 - £35000 per annum: Randstad Education Cambridge: The JobAre you a trai...