The Royal Mail Group has cut its pension scheme deficit from £8 billion in 2010 to £4.5 billion in 2011, but still describes it as a disproportionate burden on the business.
Its annual results for 2010/11 stated that the decrease in the accounting pension scheme deficit was driven by an actuarial gain of £3.4 billion.
Cash payments of around £300 million were made throughout the year to fund the pension deficit, which was reduced by a further £3.5 billion because of the government's decision to use the consumer prices index (CPI) rather than the retail prices index (RPI) as the inflation measure.
For 2010/11 the group made £39 million, compared to £180 million the previous year.
A Royal Mail Group statement said: "The next two years will be challenging.
"We need to reduce our costs faster than the decline in revenues from our core letters business."
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