royal mail

Royal Mail (LON:RMG) became the biggest faller on the FTSE 100 on Friday, with shares dropping more than 2 percent after the company offered workers a new pension plan.

The offer came after significant union opposition to Royal Mail’s decision to close their defined benefit pension scheme, which pays out based on workers’ final salary and length of service.

The company have struggled financially with the weight of this type of pension plan, and are now offering workers a choice between a defined-benefit and a defined-contribution scheme.

“Royal Mail is one of few companies offering to replace one defined-benefit scheme with another,” the company pointed out.

“Royal Mail believes that the risk to the company of the proposed defined benefit cash balance scheme would be materially lower than under the current plan and is a manageable risk,” it said.

Royal Mail have said the new plan is likely to cost about £400 million annually, a significant cost-saving on the £1 billion it would cost to keep the original final salary pension scheme running.

Royal Mail shares are currently trading down 2.26 percent at 401.70 (1334GMT).

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