16th December 2020
My Ref: MRP 1/8/32
To: The Secretary All Branches & Regional Councils
AMEY RAIL & OWEN WILLIAMS SECTIONS OF THE RAILWAYS PENSION SCHEME (RPS) – 2019 ACTUARIAL VALUATION PROPOSALS
Following the 2019 triennial actuarial valuation of the Amey Rail and Owen Williams shared cost sections of the Railways Pension Scheme (RPS) the draft valuation results reveal a deficit of £18.4m in the Amey Rail section and a deficit of £3.38m in the Owen Williams section.
While these provisional results reveal an improvement in the funding levels of both sections since the 2016 actuarial valuation we were advised by management that member contributions in both section could increase significantly unless corrective action is taken.
The scheme actuary has indicated that based on the valuation results member contributions would increase as follows:
· Amey Rail member contributions from 12% to 49% (+37%)
· Owen Williams member contributions from 10% to 18% (+8%)
I can advise that our representatives have met with management on a number of occasions and following these discussions the following proposal has been made:
1. No changes to the benefit structure of the RPS
All Deficit Repair Contributions to be paid by the Company in excess of £5m pa
Member contributions to be capped and reduced:
· Amey Rail currently 11.8% to 10.55% (-1.25%)
· Owen Williams currently 11.36% to 10% (-1.36%)
Increases to Pensionable Pay capped at the lower of RPI or 0.5%
Basic State Pension offset to be capped at 0.5%.
Matched AVCs – Company will offer additional employee-matched DC pension contributions (through an RPS AVC facility) up to 7.5% of the increase in non-pensionable basic pay awarded at either annual pay reviews or a promotion
This agreement to be in place for 6 years (two triennial valuations)
In consideration your NEC on 10th December 2020 made the following decision:
“That we note the report and the proposals developed through discussions.
We note the results of the valuation and the deficit levels of nearly £22m across the two sections and the major increases in member and employer contributions that would fall due if mitigations are not agreed.
In view of the commitment by the company that they will solely fund the deficit payments of nearly £22m, the protection of the benefits structure, and the reductions and caps on member contributions for a period of six years, and being aware of the caps on pensionable pay, and that the Lead Officer & Negotiating team are of the view that the proposals should be accepted.
The General Secretary is therefore instructed to inform the company of this union’s acceptance.
Members to be advised by text and email
Branches & Regional Councils to be informed”
I will keep you advised of developments.
16th December 2020