Owen Williams Section of the Railways Pension Scheme – 2013 Actuarial Valuation

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My Ref: MRP 1/8/64                                            12th December 2014
 
                                            Circular Num: NP/269 /14
To: The Secretary All Branches & Regional Councils

Dear Colleagues,

Owen Williams Section of the Railways Pension Scheme – 2013 Actuarial Valuation

Following the 2013 triennial actuarial valuation of the Owen Williams shared cost section of the Railways Pension Scheme (RPS) the draft valuation results reveal a surplus of £2.990 million with a funding level of 105.6%.

Amey Rail is the sponsoring employer for the Owen Williams section.

In line with the 2010 actuarial valuation results the member contribution rate was due to increase from 5.00% to 12.08% by July 2015. However, after discussions with RMT representatives it was agreed to increase the contributions over a 5 year phased period.

Therefore between the 2010 and 2013 actuarial valuations members were paying less than 40% of the Joint Contribution Rate, while the employer continued to pay their proportion i.e. 60%.

Despite the surplus member contributions are still required to increase as a result of a 5% reduction in the funding level. In 2010 the funding level was 111% with a surplus of £4.95 million.  

The actuary is advising that the Joint Contribution Rate should be set at the following rates:

•    Member 10.00% to 11.04% (+1.04%) / Employer 18.12% to 16.56% (-1.56%)

    (This results in the 60/40 shared cost arrangement being resumed).

Management believe that as a result of the reduction in the funding level action needs to address to avoid the scheme falling in to deficit.

Following discussions with RMT representatives, management are proposing:

•    Pensionable pay cap of RPI to a maximum of 2.25% until 2019

•    Member contributions to be maintained at the present rate of 10.0% until 2019 valuation

•    1.4% of members contribution rate to be paid by the employer until 2019

•    Employer contribution rate to reduce from 18.12% to 17.60% (-0.52%)

•    The scheme to remain open for non-protected persons to accrual future service benefits (initially management wanted to cease future accrual for these members)

•    The company agrees to absorb their National Insurance rebate and not pass it on to members. This is a permanent proposal

The General Grades Committee in consideration of this proposal noted and adopted the following report on 4th December 2014:

“We note the proposals on file and further note that our representatives are recommending acceptance of the proposals.   

Therefore we instruct the General Secretary to inform the company of our acceptance.

Branches and Regional Councils to be informed.”

I will keep you informed of any developments.

Yours sincerely,

 

Mick Cash
General Secretary