The value of the Royal Mail Statutory Pension Scheme’s (RMSPS’s) liabilities rose by just over £5bn year-on-year, as of March 2020, the government’s annual report and account for the scheme has revealed.

Its liabilities rose from £43.96bn on 31 March 2019 to £48.99bn on 31 March 2020.

This is the highest value of liabilities recorded for the scheme, after liabilities decreased from £46.39bn to £43.96bn between March 2018 and 2019.

As of 31 March, the scheme had assets totalling £23.4m and £60.1m of liabilities payable within 12 months.

When the government assumed responsibility for the scheme for the Royal Mail Pension Plan’s (RMPP’s) deficit and the majority of its liabilities in 2012, the RMSPS was established to provide retirement and death benefits to former members of the RMPP and their dependents.

The RMSPS is an unfunded, defined benefit scheme that is closed to new members and the accrual of new benefits.

There are no investment arrangements within the RMSPS to meet its liabilities and future benefits will be paid out of the consolidated fund, to the extent that parliament votes the necessary funds as requested by the Cabinet Office.

The government’s report revealed a total cost of £300m for Guaranteed Minimum Pension (GMP) equalisation and indexation.

The scheme has 85,028 active deferred members with pensions totalling £459m, as of 31 March 2018, 110,452 deferred pensioner members with pensions of £369m and 205,988 pensioner members with pensions totalling £1.1bn.

Government Actuary’s Department actuary, Louise Doyle, explained that the current population mortality projections make no specific allowance for the impact of Covid-19.

“My view is that it is too early in the pandemic to determine whether Covid-19 changes the long-term view of life expectancy in the UK,” she explained.

“It is therefore not unreasonable to retain the existing mortality assumptions. A death rate from Covid-19 in excess of that already allowed for in the mortality assumptions would emerge as an experience gain over the next year’s accounts.”

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