A union representing workers rejects the move, arguing “it would still represent a significant shortfall in the pensions promise”.
Royal Mail has offered staff a choice between a defined benefit or contribution pension scheme, after opposition from trade unions including the threat of possible strike action, reports Sky.
But while one of the two unions representing workers planned to vote on the new proposal, the other rejected it.
Royal Mail announced in April that it planned to close its defined benefit pension scheme from March next year on cost grounds, following a consultation with the plan’s 90,000 members.
A review found it would need to more than double annual contributions to more than £1bn to keep the plan running.
However, on Friday, Royal Mail said it had made a new offer to members which included the option of a more affordable replacement defined benefit pension scheme.
It said it had held “extensive talks” with both unions – Unite, which represents the firm’s managerial staff, as well as the Communication Workers Union (CWU), which represents frontline workers.
It said Unite was planning to hold a consultative ballot of its members on the new proposal because it believes this is the “best available deal” and a “significant improvement” on an earlier proposal.
But the CWU rejected the proposal, arguing it “does not meet our aspiration of a wage in retirement pension scheme”.
Terry Pullinger, the CWU’s deputy general secretary for postal, said it “still promotes the conventional wisdom of a cash-out arrangement at the point of retirement”.
“It would still represent a significant shortfall in the pensions promise and it is not something that we are prepared to recommend to our members,” he added.
A defined benefit plan pays out an amount according to workers’ final salary and length of service.
A defined contribution plan payout depends on how much workers and employers have put in during the course of the scheme.
Under the new proposals, the defined benefit cash balance scheme would provide members with a guaranteed lump sum at retirement, with Royal Mail upping its contribution.
Staff would also have the option of joining a new defined contribution scheme as an alternative.
In a statement Royal Mail said: “In our view, from a sustainability perspective, the CWU proposal – based on investing 100 per cent of the money in riskier assets such as shares – is too risky.
“We also calculate the CWU proposal would cost significantly more than we can afford.”