Achieving a pensions breakthrough has helped Royal Mail (RMG) continue its positive momentum with its strongest and longest rally in two years.
Investors are relieved that Royal Mail’s pension and pay troubles are over for now, effectively averting industrial action as the shares accelerated 9% to 511.8p.
WHAT HAS ROYAL MAIL AGREED TO?
The parcels delivery service says its defined salary pension scheme will close on 31 March, but the new scheme has several benefits.
Members will continue to contribute 6% of their pay towards their pensions and Royal Mail will contribute 13.6%.
Employees will also enjoy a 5% boost in pay, up until April 2019. After this, the pay rise will drop to 2%.
Employees will also enjoy a shorter working week, while the company can keep annual pension costs at around £400m.
Royal Mail can push for transformational changes to enhance profitability by using technology to efficiently deliver parcels and undertake later collections.
