Railways Pension Scheme - BRASS (AVC) Proposals

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Dear Colleague,

RAILWAYS PENSION SCHEME – BRASS (AVC) PROPOSALS

As many of you will be aware the Railways Pension Scheme (RPS) Trustee Company has recently reviewed the investment funds offered to those scheme members who have holdings in BRASS, the RPS Additional Voluntary Contributions (AVC) arrangement. After seeking professional investment advice, the Trustee are replacing all existing AVC investment options with a new range of self-select funds and two new lifestyle strategies with the exception of some Pension Assured Fund (PAF) holdings.

The reason behind this decision is that the Trustee has a legal obligation to ensure the fund range offered to BRASS members is suitable and there is an appropriate level of diversity.

The Trustee is introducing five new self-select funds:

•Global Equity Fund •Long Term Growth Fund

•Aggregate Bond Fund •Index-Linked & Global Bond Fund

•Deposit Fund

And two Lifestyle strategies which members can also choose one of:

•BRASS Global Equity Lifestyle strategy •BRASS Long Term Growth Lifestyle strategy

Members current holdings will be transferred to these new funds and strategies, and future contributions will also be made into these new investment vehicles.

RPMI, the RPS administrators, have recently sent out individually ‘tailored’ letters and personalised illustrations across eight broad categories based on age, if PAF holdings exist, and if they are active or deferred members of the RPS. It needs to be pointed out that some members may have received more than one illustration if they have more than one set of BRASS funds because of a break in RPS membership or a change in railway employer.

Those members with PAF holdings fall into six categories:

BRASS Active Member in PAF aged under 46 - Defaulted out of PAF into BRASS Long Term Growth Lifestyle strategy – no option to remain in PAF but can choose to invest in one or more of the new funds and/or one of the lifestyle strategies

BRASS Deferred Member in PAF aged under 46 - Defaulted out of PAF into BRASS Long Term Growth Lifestyle strategy – no option to remain in PAF but can choose to invest in one or more of the new funds and/or one of the lifestyle strategies

BRASS Active Member in PAF aged 46 to 50 - Defaulted out of PAF into BRASS Long Term Growth Lifestyle strategy but can choose to remain in PAF and can choose to invest in one or more of the new funds and/or one of the lifestyle strategies

BRASS Deferred Member in PAF aged 46 to 50 - Defaulted out of PAF into BRASS Long Term Growth Lifestyle strategy but can choose to remain in PAF and can choose to invest in one or more of the new funds and/or one of the lifestyle strategies

BRASS Active Member in PAF aged over 50 - Remain in PAF but can choose to invest in one or more of the new funds and/or one of the lifestyle strategies

BRASS Deferred Member in PAF aged over 50 - Remain in PAF but can choose to invest in one or more of the new funds and/or one of the lifestyle strategies

There are two additional non-PAF categories for those members who do not have PAF holdings but are in BRASS. These two categories are BRASS Active Member not in PAF and BRASS Deferred Member not in PAF. As with the members in PAF, the personalised illustration sets out each individual’s default switching from their existing holdings and future contributions into the new funds/lifestyle strategy range.

Many members with PAF holdings will also have other non-PAF holdings within their BRASS funds. The personalised illustration for those members takes this into account and sets out each individual’s default switching from their existing non-PAF holdings and future contributions into the new funds/lifestyle strategy range as well as setting out the position regarding their PAF holdings.

BRASS members have the choice either to accept the default switch or elect to make their own investment decisions using the new funds and strategies being made available. If members wish to make their own investment choices they need to inform RPMI by 22nd April 2013 or their past and future BRASS funds will be switched automatically into the fund(s) or strategy shown on the member’s personalised illustration. However, members will have the opportunity to change where their BRASS funds are invested in future. If you have any questions on your BRASS investment fund change pack, you can contact the RPMI Helpline on 0800 2 343434 and press option 1 by 22nd April 2013.

From the 1st May 2013 the holdings individuals have already built up in BRASS and their future BRASS contributions will be automatically switched into one or more of the new Lifestyle Strategies and Self-Select funds mentioned above. Members past and future BRASS contributions will be moved into the default fund (or funds) which is the nearest equivalent to their present investment choice. Members should refer to their illustration for more information as it is individually tailored to their own BRASS arrangements.

A number of members and representatives have contacted Head Office seeking advice as to what action they should be taking in regards to this change. Regrettably the RMT are unable to comment as this would constitute financial advice under the Financial Services Act and the RMT is not registered to give such advice. It is therefore important that if members require advice that they should seek their own Independent Financial Advice.

Details of local Independent Financial Advisors can be found at http://www.unbiased.co.uk/.

Yours sincerely,

R. Crow,

General Secretary