Anglia, LER & GE Sections of the Railways Pension Scheme– Ending of Contracting-Out Proposals

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My Ref: MRP 1/8/231                                              18th February 2016
 
                                            Circular Num: NP/069/16
To: The Secretary All Branches & Regional Councils

Dear Colleagues,

Anglia, LER & GE Sections of the Railways Pension Scheme– Ending of Contracting-Out Proposals

As you will recall from previous Circulars as a result of Government legislation defined benefit pension schemes which currently contact out of the State Second Pension will no longer be able to do so from April 2016. Both members and employers will see an increase to their National Insurance Contributions (NIC) of 1.4% and 3.4% respectively as the rebate associated to contracting-out is abolished.

While members will have no choice but to accept the increase in NICs, the Government has put in place legislation which will allow employers to recoup their additional payroll cost by either changing future service benefits or/and increasing contributions. However, the employer still has to consult with members.

Please note the employer has to seek actuarial advice and cannot recoup more than the rebate.

The RMT and our sister unions have been meeting with TOC employers through the Informal Pensions Working Group (IPWG) to find a set of generic proposals which could be used across all TOCs. The final proposals (framework) which were agreed by the RMT General Grades Committee on 1st December 2015 are:

•    Cost Neutral Early Retirement Factors to age 62 for non-protected members for future service only

•    Pensionable pay increases capped at RPI + 0.25% with any increase above the cap being pensionable for future service only. This change affects protected, indefeasible right and non- protected members

In accordance with these proposals Abellio management have informed our representatives that they intend to recoup their NICs rebate from all three Railways Pension Scheme sections and wish to use the IPWG framework proposals. Management have indicated that their estimated additional payroll costs for each of their three sections are as follows:

1.    Anglia Railways additional payrolls cost £396k per annum. These proposals will recoup £221k per annum.
2.    Great Eastern additional payrolls cost £758k per annum. These proposals will recoup £752k per annum.
3.    London Eastern Railways additional payrolls cost £456k per annum. These proposals will recoup £456k per annum.

As a result of these proposals the Joint Contribution Rate for these sections will reduce for members and the employer.


This item was placed before the National Executive Committee on 18th February where the following report was adopted and noted:

“That we note the employers contracting-out proposals are in accordance with the Informal Pension Working Group proposals which have already been accepted by this union.

We also note the reduction in the Joint Contribution Rate which is a result of these proposals.

Therefore we note the correspondence on file.”

For further information on the ending of contacting and the IPWG framework proposals please go to http://bit.ly/1Vd7ytS or refer to Circular No. NP/256/15 of 18th December 2015.

Yours sincerely,

 

Mick Cash
General Secretary