Get the latest news from RMT as it happens - join our media mailing list
Circular No. NP042/08
April 3, 2008
Dear Colleague,
Railway Pensions Commission Report - Railways Pension Scheme
Further to my circular letter No. NP010/08, of 7th February, a meeting has taken place with employer representatives from the TOCs, Engineering Companies, Network Rail and Freight Companies, under the auspices of the TUC. At the meeting it was agreed the participants would refer back to their respective governing bodies the following proposal.
Firstly, that an overall body under the auspices of the TUC would continue to meet so as to have an overview of issues covering everyone arising from the Pensions Commission’s Report, and; secondly, the formation of sub groups relating to the different sectors; namely, TOCs, Freight, and Engineering, plus Network Rail which already has an established Pensions Forum.
A meeting of RMT’s Trustee/Pension Committee representatives took place on 12th March in order to hear their views on the Commission’s Report. This development has also been considered by the General Grades Committee where the following recommendation was noted:
“That the GS is instructed to write to all members personally, and Branches and Regional Councils, giving an up-to-date position on the Railways Pension Scheme and the outcome of the Commission; reiterating our Union policy and the four points associated with it.
Further, the GS is instructed to continue to get all four unions united in one campaign based on our Union’s policy. A campaign based on propaganda and meetings to be arranged nationally commencing in June 2008 once the Draft RPS valuation figures are available from the actuary.
Further, we attend the meetings under the auspices of the TUC and report back after every meeting to the GGC. Our representatives to be:
1. The overarching Committee - the GS and Bro. J. Jones,
2. ATOC Sections – AGS Sikorski and Bro. Alex Gordon,
3. Network Rail – the GS and Bro. P. Burton,
4. Freight – Regional Organiser Bialyk and Bro. P. Collins,
5. Engineering-AGS Cash and Bro. R. Potts.Our aim is to implement Union policy with a view that our members are ‘not worse off’ under their pension entitlement.”
I would remind members that this issue arose from the 2004 valuation of the RPS which revealed massive deficits and the need for a significant increase in members’ contributions. RMT was concerned at the impact of contributions rising to an unacceptable and unsustainable level. As a result we adopted four main demands as follows:
1. Cap employee contributions at 10.56%;
2. Keep benefits at least at their current level;
3. Streamline the scheme into three active sections (Train Operating Section, Engineering & Infrastructure Section and an Omnibus Section); and
4. Keep the scheme open to all employees.
During discussions with employers we were successful in negotiating a cap on contributions for the majority of Sections. For many TOC Sections, deficit payments were artificially reduced to around 10.5% in the hope that the 2007 valuation would reveal an improved financial situation and stem the necessity for further rises. However, in the interim it was also agreed to establish an independent Commission to examine the Railways Scheme
The Railways Pension Scheme Actuary is currently proceeding with his valuation of the Scheme’s financial position as at 31st December 2007. It is anticipated that the draft results will be available to the Trustees towards the end of June. The Actuary has already indicated that regardless of the financial returns during the last three years, further anticipated improvements in life expectancy will result in an increase of contributions, on average, of around 3%. If so this would increase members’ contributions by around 1.2%. Obviously these are only early estimates, and each individual Section will be affected differently, some with higher contributions, others lower. However, it is important to note that once again the Actuary is predicting a necessity for higher basic contributions regardless of whether or not deficits still exist.
As you will be aware from my previous circulars, the Commission’s Report proposes wholesale changes aimed at reducing pension costs and making the scheme more equitable, particularly for the lower paid. They propose closing the RPS and its replacement by a career average revalued earnings scheme which would reduce costs but also impact on benefits. Also proposed is the abolition of Brass, the establishment of one Section for retired and deferred former TOC employees, retirement at 65 and a standard DC Scheme for infrastructure employers. There is little doubt that the current cost of providing benefits through the RPS means that doing nothing is not an option because if costs continue to escalate members, particularly new recruits, will drop out of the scheme or employers will take unilateral action and introduce benefit changes. However, RMT is determined to ensure management do not attempt to use the Commission’s Report as a cost saving exercise, by cherry picking aspects they like rather than attempting to resolve the issue of affordable pension provision in the railway industry as a whole. If there is to be change, it is essential this should be agreed by all parties concerned and most importantly that defined benefit salary based pension provision of an acceptable level is retained within the industry.
A meeting has already been held with Network Rail where they have also proposed a Career Average Earnings Scheme; albeit Contracted-in to the State Second Pension. Their proposals are currently being evaluated. A meeting with the TOC representatives is scheduled for 23rd April. Full details will be provided in due course.
I shall, of course, keep you advised of developments on further discussions with management and our campaign as outlined in the GGC decision. However, I would take this opportunity to assure members that every effort will be made to protect their interests.
Yours sincerely,
Bob Crow,
General Secretary
