Circular No. NP/083/07
BRASS Pension Assured Fund (PAF)
Members of the Railways Pension Scheme making additional voluntary contributions to the BRASS Pension Assured Fund have received a letter from Pensions Management advising that with effect from 18th June no further contributions will be accepted into the PAF. This decision has been taken because the latest advice suggests investment returns on new contributions may be lower than past investments.
Brass contributions can still be made, but members are being offered three alternative funds for future contributions, namely:
· Pension Managed
· Pension Deposit
· Pension Global Equity
If members do not specify to which of the above funds they wish to use for future contributions, they will be invested in the Pension Deposit Fund.
Members may, if they wish, also transfer the value of their past contributions to one of the above three funds, but this will remain in the Pension Assured Fund unless members specifically direct otherwise. However, for members considering transferring their assets, it should be noted that the value of pre 18th June PAF assets for those under age 55 may be reduced on transfer. This decision does not affect BRASS contributors to the five other BRASS funds which closed to new entrants on 1st September 1996.
A number of members and representatives have contacted Head Office seeking advice as to what action they should take in regard to their future contributions and the value of their existing funds. Regrettably I am unable to comment as this would constitute financial advice under the Financial Services Act and RMT is not a registered financial adviser. However, to clarify the situation PAF members need to consider two issues; firstly, to which fund should future contributions be directed, and secondly; whether they should transfer their existing PAF assets, and if so to which fund.
In considering these matters, members may wish to think about whether, given the considerable reduction the flow of new money into the PAF, their past investments will continue to grow in value at the rate anticipated. If not, and that one of the reasons for withdrawing new contributions to the PAF, then to which of the other funds should these be transferred. With regard to future contributions, members will need to consider whether it is in their interests for these to be directed to the Deposit Fund. Any decision in this regard should be based on the anticipated returns to be achieved from each the three remaining funds, the security of their assets in terms of market volatility, and the length of time until retirement. I would reiterate however, that if they do nothing future contributions will be to the Deposit Fund and their past service investments will remain in the PAF.
I very much regret not being able to provide more specific advice, but as mentioned above RMT is not able to do so. However, Pensions Management has agreed, with financial advisers Origen, special terms for contributors over fifty years of age intending to retire. A fee is charged for other services. There is also a Brass helpline for general information - 01438 732428, but once again this will not provide specific financial advice concerning in which Fund to invest.