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Royal Mail emerging from the shadow of its pensions obligations

“We regard the recent broad set of agreements between the two parties as a landmark,” Barclays said
Pension key ring
All involved deserve credit for agreeing the pensions deal

The recent agreement between Royal Mail PLC (LON:RMG) and the CWU union over pensions, has removed a toxic element from the stock, in Barclays' view.

The bank has kept its rating at 'overweight' and raised its forecasts following the recent agreement and the parcels and letters delivery giant's February 1 trading update.

READ: Royal Mail highlights “continuing good trading” performance, as it confirms agreement in principle with union

“We regard the recent broad set of agreements between the two parties as a landmark,” Barclays said.

“To have closed, with a small surplus, one of the larger defined benefit pension schemes in the UK; to have replaced it with an affordable defined contribution scheme (possibly collective subject to government negotiation); and to have agreed on a pay deal to April 2020, without industrial action, is a remarkable and forward thinking effort by all involved, in our view,” the bank said.

The bank cautions that it will still be necessary to see how the moves to a shorter working week and associated changes in working practices develop, but there is now a strong platform, in its view.

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