Comments on: The Post Office – a large pension fund with a company attached http://johnredwoodsdiary.com/2008/03/20/the-post-office-a-large-pension-fund-with-a-company-attached/ Incisive and topical campaigns and commentary on today's issues and tomorrow's problems Wed, 23 May 2012 13:35:04 +0000 hourly 1 By: Michael Corby http://johnredwoodsdiary.com/2008/03/20/the-post-office-a-large-pension-fund-with-a-company-attached/#comment-2153 Michael Corby Mon, 13 Oct 2008 16:08:23 +0000 http://www.johnredwoodsdiary.com/2008/03/20/the-post-office-a-large-pension-fund-with-a-company-attached/#comment-2153 The state of the PO has got much much worse. The latest PO pension fund report shows that the deficit has risen to over 5 bn. Since then equities and property values have crashed, and these will cost the fund at least another £5 bn, without allowing for lost dividends. But the bad news does not end there. In the short run inflation as measured by RPI will increase, and it provides RPI index linked pensions. But, the bad news does end there - - - the last valuation was before the substantial up-rating of life expectancy, so there is a hidden deficiency waiting to be applied at the next formal revaluation. But, the bad news keeps coming. The PO paid in out of its reserves, and HMG put monies into an escrow account (just under £2bn in total) to allow the deficiency to be paid off over 17 years instead of 10 years. However the contribution form the government will have to be repaid. And the transfer from the PO reserves has correspondingly devalued the business. And the bad news keeps coming - - - the mail business is now ex growth: it was ex growth before the credit crunch began to take effect. The mainstays of the business are business mail, particularly advertising, circulars and financial mail. This will be really hard hit. So - - an ever increasing pension deficiency having to be underwritten by ever decreasing revenues. Is this going to be the next big government bail out? If not what then for the mail services there is nothing much left to cut, and price increases will be counter productive. The state of the PO has got much much worse.

The latest PO pension fund report shows that the deficit has risen to over 5 bn.

Since then equities and property values have crashed, and these will cost the fund at least another £5 bn, without allowing for lost dividends.

But the bad news does not end there. In the short run inflation as measured by RPI will increase, and it provides RPI index linked pensions.

But, the bad news does end there – - – the last valuation was before the substantial up-rating of life expectancy, so there is a hidden deficiency waiting to be applied at the next formal revaluation.

But, the bad news keeps coming. The PO paid in out of its reserves, and HMG put monies into an escrow account (just under £2bn in total) to allow the deficiency to be paid off over 17 years instead of 10 years. However the contribution form the government will have to be repaid.

And the transfer from the PO reserves has correspondingly devalued the business.

And the bad news keeps coming – - – the mail business is now ex growth: it was ex growth before the credit crunch began to take effect. The mainstays of the business are business mail, particularly advertising, circulars and financial mail. This will be really hard hit. So – - an ever increasing pension deficiency having to be underwritten by ever decreasing revenues.

Is this going to be the next big government bail out?

If not what then for the mail services there is nothing much left to cut, and price increases will be counter productive.

]]> By: A Ellis http://johnredwoodsdiary.com/2008/03/20/the-post-office-a-large-pension-fund-with-a-company-attached/#comment-2152 A Ellis Thu, 20 Mar 2008 16:22:45 +0000 http://www.johnredwoodsdiary.com/2008/03/20/the-post-office-a-large-pension-fund-with-a-company-attached/#comment-2152 Articles 87,88,89 of the Amsterdam treaty lay out the rules governing monopoly, as a result our so called sovereign government has to seek permission from the EU commission on state aid and funding for the royal mail and Post office. EU directive 97/96EC `Privatisation of Postal service` establish a universal postal service within the EU. The second Postal Service Directive (2002/E39/EC). The Post Office is in the situation where it is obliged to deliver the unprofitable mail, while half of the profitable mail throughout the EU is taken by the Dutch TNT and Deutsche Post. Any packages that the unreserved sector do not wish to handle, can be passed back to the Royal Mail to deliver, at 13p per item. It's no wonder that the Royal Mail's operating profit fell by 86% to just 22million in the first half of 2006/07. Your masters in Brussels, ( the competition commissar) allowed the subsidy to run until March 2008. The Amsterdam treaty forbids our sovereign government from subsidising our rural post office network. While at the same time bringing in directives that undermine it's profitability. This despicable government removed it's custom purposely to undermine the profitability of the Royal Mail, to create a reason it could give to the public to cover up, yet another, treacherous act about to be perpetrated upon our nation. Articles 87,88,89 of the Amsterdam treaty lay out the rules governing monopoly, as a result our so called sovereign government has to seek permission from the EU commission on state aid and funding for the royal mail and Post office.
EU directive 97/96EC `Privatisation of Postal service` establish a universal postal service within the EU.
The second Postal Service Directive (2002/E39/EC).
The Post Office is in the situation where it is obliged to deliver the unprofitable mail, while half of the profitable mail throughout the EU is taken by the Dutch TNT and Deutsche Post.
Any packages that the unreserved sector do not wish to handle, can be passed back to the Royal Mail to deliver, at 13p per item.
It's no wonder that the Royal Mail's operating profit fell by 86% to just 22million in the first half of 2006/07.
Your masters in Brussels, ( the competition commissar) allowed the subsidy to run until March 2008. The Amsterdam treaty forbids our sovereign government from subsidising our rural post office network. While at the same time bringing in directives that undermine it's profitability.
This despicable government removed it's custom purposely to undermine the profitability of the Royal Mail, to create a reason it could give to the public to cover up, yet another, treacherous act about to be perpetrated upon our nation.

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