Caledonian Sleeper Shared Cost Section of the Railways Pension Scheme - 2015 Actuarial Valuation Proposals
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My Ref: MRP 1/8/74 11th May 2017
Circular Num: NP/071/17
To: The Secretary All Branches & Regional Councils
CALEDONIAN SLEEPER SHARED COST SECTION OF THE RAILWAYS PENSION SCHEME - 2015 ACTUARIAL VALUATION PROPOSALS
Resulting from the setting up of the (Serco) Caledonian Sleeper section of the Railways Pension Scheme (RPS) an actuarial valuation had to be carried out on 31st December 2015 to ensure the assets matched the liabilities of this new fund. The results of the valuation revealed a deficit of £119k, with a funding level of 97.5%, and therefore corrective action was required.
The scheme actuary indicated that based on a 10 year deficit recover period member contributions would increase from 9.32% to 10.76% (+1.44%) and the employer contributions from 14.28% to 16.14% (+1.86%).
As a result of the increase in contributions management proposed to use the framework which was used by Train Operating Companies to recoup their National Insurance Contribution rebate of 3.4% which resulted due to the ending of Contracting-Out in 2016. The proposals were as follows:
• An increase in the Normal Retirement Age from age 60 to 62 for non-protected members for future service only
• Pensionable pay increases capped at RPI + 0.25%, with any increase above the cap being pensionable for future service only. This change affects protected, indefeasible right and non- protected members
If these proposals were implemented contributions would increase for protected members from 9.32% to 9.76% (+0.44%) and reduce for those members who are non-protected from 9.32% to 8.68% (-0.64%).
This item was considered by the National Executive Committee on 9th May 2017 and subsequently referred to the Pension Industry Wide Subcommittee for further consideration. This subcommittee made the following report:
“That we note the correspondence on file in respect of the effects of the proposed changes on the contributions and funding position as per the 2015 valuation.
We further note that the proposals are in line with the TOC’s but in this case they are being used to address the 2015 valuation deficit rather than the National Insurance Contribution issue.
Therefore the General Secretary is instructed to inform the company of our agreement to the proposals on condition that they provide a written assurance that they will not be seeking to recoup their costs in regards to the increase in National Insurance in the future.
Branches and Regional Councils to be informed.”
Having contacted management they have formally assured the RMT that they will not be seeking to recoup their National Insurance Contribution rebate at a later date.
This item was again placed before the National Executive Committee on 11th May 2017 where the following decision was made:
“That we note and adopt the report of our Pensions Industry Wide Subcommittee.
We further note the confirmation on file from the employer that they will not be seeking to recoup their National Insurance Contribution rebate at a later date.
We therefore instruct the General Secretary to inform the company that we agree to their proposals.”
I will keep you informed of any developments.