UK postal company Royal Mail is believed to be poised to report the positive news that its profits have increased to nearly GBP600 million for 2006. However, over the same timeframe the company's pension liability has increased by GBP1.1 billion.

<p>The previously-troubled postal company has successfully taken a number of steps back the brink having turned itself around in recent years from a lossmaker into profitability. However, with its pension commitment spiraling, the burden of retirement provisions has left the specter of bankruptcy hanging over Royal Mail.<br /><br />According to the Times Online, Royal Mail will have to increase its annual contribution from GBP600 million to GBP800 million to address a pension gap that has now swelled to GBP5.5 billion, according to a new review. <br /><br />Reports suggest that the state owned postal company is planning to inject GBP700 million into its pension fund; however, speculation that the UK government will have to inject massive funds itself have also resurfaced in the face of the new revelations.</p>