Forth Ports Group Pension Scheme – 2014 Valuation & Ending of Contracting-out Proposals

My Ref: MRP 23/10                                   24th February 2016
                                            Circular Num: NP/074/16
To: The Secretary All Branches & Regional Councils

Dear Colleagues,

Forth Ports Group Pension Scheme – 2014 Valuation & Ending of Contracting-out Proposals

Following the 2014 triennial valuation of the Forth Ports Group Pension Scheme the results reveal a deficit of £20 million with a funding level of 93%.  

Presently the employer pays contributions of 13% for future service and was paying deficit correction payments of £650k per annum until 31st December 2015. Member contributions are between 6% and 10% depending on what accrual rate individuals decide to choose.

Management has stated that the employer future service contribution rate will increase from 13% to 14.7% and that benefit changes need to be made to plug the deficit as well a

The 2008 valuation results revealed a deficit of £30.7 million with a funding level of 85% as a result the scheme moved from Final Salary to a CARE arrangement.  This benefit change resulted in the deficit reducing from £30.7 million to £5.8 million between the 2008 and 2011 actuarial valuations.

However, despite significant improvements in the funding level of the scheme management have stated that the scheme is still too expensive.  Management has therefore made a number of proposals which would reduce the employer’s future service contribution rate from 13% to around 12.5%. The proposals are:

•    Aligning the Normal Retirement Age (NRA) of the scheme to the normal State Pension Age.

•    Pensions in payment to be capped at CPI to a maximum of 2.5%. Presently pensions in payment are increased by RPI to a maximum of 5%.

•    Closing the scheme to new entrants

•    Ceasing Future accrual for temporary early retirement pension.

•    Spouses pension to calculate on pensioners or deferred pensioner’s actual pension.

Not content with the above proposals management also want to recoup the employers additional payroll costs which will result from the ending of contacting-out in April 2016. Management have anticipated that this additional payroll cost will be approximately £700k per annum. Management’s proposal to recoup this on cost is to give members two options:

•    Members to accept an increase in their pension contributions of 2.6% (members already pay between 6% and 10%)
•    Members to change the level of their accrual rate i.e. the level at which members build up pension. The level of accrual will depend on the member’s current rate.

Clearly these proposals are a major attack not just on our members’ future pension rights but are intended to make them work longer.

Our representatives recently met with our sister union Unite the Union to discuss these proposals and a possible joint strategy to protect our members pensions. Following consultation with members Unite the Union are to ballot their members for industrial action.

I can also report that the RMT Regional Organiser for Forth Ports has also consulted with RMT members and placed a report in front of the National Executive Committee on 23rd February 2016 who made the following report:

“That we note the updated report on file from our Lead Officer received on 19th February. We therefore instruct the General Secretary to write to the employer advising them that a dispute situation has arisen.

We also instruct the General Secretary to ballot the affected members for Industrial action and action short of strike action on changes to the pension scheme.

This ballot should run from Tuesday 1st March until Monday 14th March 2016.

All affected members to be notified by email and letter.

Affected Branches and Regional Councils to be advised.”

Please be advised that management have been informed that we are now in a dispute situation and that the RMT will therefore ballot its members.

I will keep you informed of developments.

Yours sincerely,


Mick Cash
General Secretary