Eurostar Section of the Railways Pension Scheme – Ending of Contracting

My Ref: MRP 1/8/4                                            7th October 2015
                                            Circular Num: NP/189/15
To: The Secretary All Branches & Regional Councils

Dear Colleagues,

Eurostar Section of the Railways Pension Scheme – Ending of Contracting

As you will be aware as a result of Government pension reforms (Pension Act 2014) the Basic State Pension and the State Second Pension will be replaced for those retiring after April 2016 by the Single Tier State Pension. From this date Defined Benefit pension schemes will no longer be able to Contract-Out of the State Second Pension.  

Therefore employers and pension scheme members will no longer receive the National Insurance Contribution rebate associated to Contracting-Out.  Presently Pension Scheme members receive a rebate of 1.4% on qualifying earnings and employers 3.4%.

While pension scheme members will see a reduction in their take home pay the Government has included within the legislation the right to allow employers the ability to recoup their rebate without the need of trustee consent. This will allow the employer to either change future service benefits or/and increase member contributions. Employers will still have to consult with members and trade unions but they would not need agreement.

The Eurostar section of the Railways Pension Scheme is one such fund that contracts out and management have indicated that the additional cost as a result of the employer losing the National Insurance Rebate is anticipated to be in the region of £1.3 million per annum.

Following meetings with RMT representative’s management have decided that Eurostar will absorb the additional £1.3 million. Therefore members will not see any future benefit changes or increases to their pension contributions.

The General Grades Committee in consideration made the following report on 30th September 2015:

“That we note the report on file that Eurostar have agreed to absorb the additional increase. Although this is good news for our members it is doubtful that any other scheme employers will take the same approach.

However, the General Grades Committee believes that we should pursue this approach with all employers and strive to achieve this for all. Branches and Regional Councils to be advised.”

I would like to take this opportunity to congratulate our representatives on reaching this agreement. This sends out a clear message to other employers that just because they are allowed to recoup their National Insurance Contribution rebate it does not mean that they are have to.

I will keep you informed of any developments.

Yours sincerely,


Mick Cash
General Secretary