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"Move to deleted items folder" not working on Exchange 2010 retention policy

Hi,
I have applied a Retention Policy Tag with action "Delete and Allow Recovery" to the inbox on a mailbox and it works fine.
When I change the action to "Move to the Deleted Items Folder", it does not seem to work.
Any help is appreciated. I've just started learning retention tags and policies and I'm a bit confused!
Thanks!

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abhijitmdp
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You'll need to install windows and exchange update, if its really not working.
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I'm on Windows 2008 R2 and Exchange 2010 SP1 - are you suggesting Rollup2 for SP1 will sort it out?
You'll run windows update and this will automatically download and install the updates.
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