Unipart Rail Section of the Railways Pension Scheme – 2013 Actuarial Valuation

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My Ref: MRP 1/8/19                                   21st April 2015
 
                                            Circular Num: NP/070 /15
To: The Secretary All Branches & Regional Councils

Dear Colleagues,

Unipart Rail Section of the Railways Pension Scheme – 2013 Actuarial Valuation

Following the 2013 triennial actuarial valuation of the Unipart Rail shared cost section of the Railways Pension Scheme the draft results reveal a deficit of £7.140 million with a funding level of 86.0%.

The scheme actuary has indicated that if no corrective action is taken the default Joint Contribution Rate (JCR) will increase from 1st July 2015 at the following rates, based on a 10 year recovery plan:

•    Member 14.36% to 36.44% (+22.08%) / Employer 21.54% to 54.66% (+33.12%)

Our representatives have requested that management have modelled possible caps on pensionable pay increases and a 15 year recovery period to help reduce the JCR. The RMT also requested that Unipart Rail make additional lump payments in the fund and re-open the section to new members.

The results of the modelling reveal that capping pensionable pay increases at 2% for 9 years and extending the deficit recovery period to 15 years would only bring down member contribution to 25.72%, still an increase of 11.36% on the present contribution rate.  

In respect of Unipart making extra payments into the fund and re-opening the scheme to new members these were both rejected by management.

Management have instead made the following proposal:

•    An indefinite zero cap on pensionable pay increases

•    A JCR of Members 10% / Employer 15.4%

•    Member contributions to remain fixed at 10% and the employer to take liability of the deficit

•    Members will be given the option to make additional “matching” contributions of up 15.4% into a Defined Contribution arrangement




The General Grades Committee in consideration of this proposal noted and adopted the following report on 16th April 2015:

“We note that the 2013 valuation results of the Unipart Rail Pension Scheme reveal a deficit of £7.140 million with a funding level of 86%. The scheme actuary has indicated that if no action is taken member contributions will increase from 14.36% to 36.44%.

We further note that our representatives have requested that the employer re-opens the section to new entrants and that Unipart make extra contributions into the scheme to make it affordable for members. Both of these requests have been refused by management.

It is noted that management are proposing to implement a permanent 0% pensionable pay cap. It is further noted that management have consulted with members before reaching agreement with the RMT.

We therefore instruct the General Secretary to carry out the following:

1.    Write to Unipart Rail management outlining our dissatisfaction that they consulted with members without reaching agreement with the RMT

2.    Write to the RPS Trustee Board Chairman requesting an urgent meeting with the RMT to discuss the valuation results and the proposals being made by the Unipart Rail

3.    Write to the administrators of the RPS requesting an impact assessment in relation to the implications of pensionable pay being frozen and members deferring their accrued pension

Once the above has been carried out a report should be made to the General Grades Committee.

Branches and Regional Councils to be informed.”

I will keep you informed of any developments.

Yours sincerely,

 

Mick Cash
General Secretary