Image copyright Getty Images

Royal Mail has begun a consultation over changes to its pension scheme amid threats of strike action from unions.

The FTSE 100 company said it would not be able to afford the rising cost of its contribution to the pension plan from 2018.

The move will affect 90,000 members of the defined benefit scheme.

Unite will consider strike action if Royal Mail does not "respond positively", and the CWU said "unagreed" changes would face a ballot.

Royal Mail wants members of the scheme to change to a defined contribution plan - in which the company and staff contribute to a pension pot with no guarantee of how much the eventual payment will be.

'Cause for concern'

The Royal Mail pension plan currently has a £1.7bn surplus but Royal Mail forecasts that it will run out in 2018 and that continuing contributions under the existing arrangement is "not affordable". It currently contributes £400m a year but forecasts this will rise to more than £1bn in 2018.

It said: "With our unions, we have been actively exploring possible changes to potentially enable us to keep the plan open on a defined benefit basis after March 2018 as part of our pension review process.

"We will continue discussions with our unions during and after the consultation. We will carefully consider feedback and any affordable proposals that members or their representatives make."

However, Unite said the consultation was a "cause for concern" and said it would look to mitigate the impact of any proposed changes during and after the consultation process.

Boxing ring

Brian Scott, national officer of Unite said: "The consultation is complex and the company needs to ensure that its employees, our members, clearly understand the potential impact on them, and the reasons and justification for the proposed changes."

He added: "It is too early to make any pronouncements on industrial action, but if the company does not respond positively on this and other issues we cannot rule this out."

Terry Pullinger, deputy general secretary postal at the CWU, said: "So we move from shadow boxing to the ring and negotiations will now begin in earnest, and the CWU is fully committed to developing an agreed solution which maintains the pension promise of a wage and dignity in retirement.

"However, any attempt to introduce any unagreed change by the business would be met with an industrial action ballot."

Shares in Royal Mail were down 2% to 454p.