Freightliner Section of the Railway Pension Scheme - Triennial Valuation
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Circular No: NP/014/18
Our Ref: MRP/42
TO ALL BRANCHES, REGIONAL OFFICES & REGIONAL COUNCILS
23rd January 2018
FREIGHTLINER SECTION OF THE RAILWAY PENSION SCHEME –
A number of meetings of the Freightliner Pension Forum were held last year with the RMT represented as part of the Joint Trade Unions Group to discuss options in relation to the viability of the scheme.
Freightliner’s initial covenant rating had been downgraded from a Covenant 2 to a Covenant 3, which produced a deficit of £71.8m (£50m of which is due to a Covenant 3), due to more conservative discount rates, which gave a funding level of 85%, which would create a severe risk to the viability of the scheme, which is an open section.
Following discussion and negotiations the employer believed they would be able to achieve guarantees through Freightliner Group and Gynesse and Wyoming Inc that would satisfy the trustees and a Covenant 2 would be granted. A Covenant 2 initially gave a deficit of £20.8m. Following discussions with the actuary, the early retirement liabilities for non-protected NPA60 members were revalued, and this further reduced the deficit to £16.1m.
After lengthy negotiations, the employer withdrew their proposals to increase the retirement age, and submitted the following:
• Revise the past service pensionable pay cap from RPI+0.6% to CPI from 1st April 2018.
• Introduce an automatic salary sacrifice scheme on pension contributions but with the ability to opt-out, to help mitigate increases in future pension contributions arising from the 2016 actuarial valuation.
This provides revised employee contribution rates of:
• Protected 10.62% increased to 11.8%
• Partially protected 9.82% increased to 9.94%
• Non Protected 9.3% increased to 9.86%
The NEC have agreed the proposals subject to the measures proposed being reviewed at future actuarial valuations, in particular the CPI Pensionable Pay Cap. The company has been informed.
I would be grateful if you could bring the contents of this circular to the attention of your members.