Members of the Royal Mail Pension Fund could see their benefits slashed by 50% if plans to privatise part of the company are not pursued, the trustees warn.
Trustee chairman Jane Newell has written to business secretary Lord Mandelson urging the government to press ahead with legislation which would allow part of the company to be sold off to a private buyer.
She said the 450,000 member scheme already has a significant deficit - in excess of the £5.9bn estimate used in the government's Hooper review, which investigated options for Royal Mail's future.
Newell warned ignoring the recommendations of the report - released in December last year - could have "potentially devastating consequences".
Newell said the plan's resources would not cover full member benefits and if the pension plan was wound up now it would not be able to provide 50% benefits.
She also warned the Pension Protection Fund would struggle to absorb the plan in the event of a collapse "without putting an intolerable levy strain on remaining UK pension schemes".
The trustees support the implementation of the Hooper review recommendations, subject to guarantees from the government, "for the benefit of all concerned".
The government plans to introduce legislation on privatisation on Thursday. However, this is opposed by around 100 MPs and the Communication Workers Union.
CWU general secretary Billy Hayes said: "Labour MPs, postal workers and the British public all oppose privatisation of Royal Mail.
"The pension trustees letter is a distraction designed to scare MPs . Privatisation is not linked in any way to sorting out the pension fund. It's not even about protecting pension benefits, it's about making the company viable for take-over."
A Royal Mail spokesman said: "Royal Mail is increasingly hampered by a huge and unsustainable legacy pension deficit which is costing the company around £280m in cash every year for 17 years and which is, this spring, more than likely to double from the previous level of £3.4bn.
"This is clearly unaffordable, as acknowledged in the package of solutions recommended by the Hooper report and endorsed by the government."Professional Pensions
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