£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 How the language you speak changes your view of the world
- 2 'Fire at every person you see': Israeli soldiers reveal they were ordered to shoot to kill in Gaza – even if the targets may have been civilians
- 3 Italian police 'reveal' what Jesus looked like as a young boy
- 4 Uploading pictures to find out how old you are gives Microsoft the right to post them wherever they want
- 5 YouTube social experiment shows just how easy it is to kidnap a child
How the language you speak changes your view of the world
'Fire at every person you see': Israeli soldiers reveal they were ordered to shoot to kill in Gaza – even if the targets may have been civilians
Italian police 'reveal' what Jesus looked like as a young boy
First-time buyers in London 'need to earn at least £77,000'
General Election 2015: Photographic history of Bullingdon Club tracked down - including new picture of David Cameron in his finery
In defence of liberal democracy
Over 50,000 families shipped out of London boroughs in the past three years due to welfare cuts and soaring rents
EU asylum policy is 'a direct threat to our civilisation', says Nigel Farage
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
Schools forced to act as 'miniature welfare states' with teachers buying underwear and even haircuts for poor pupils
£18000 - £25000 per annum + Commission: SThree: Are you great at building rela...
£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...
£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...
£215 per day: Ashdown Group: Junior Project Manager (website, web application ...