My Ref: MRP 1/8/43 17th February 2016
Circular Num: NP/065/16
To: The Secretary All Branches & Regional Councils
FREIGHTLINER SECTION OF THE RAILWAYS PENSION SCHEME– ENDING OF CONTRACTING-OUT PROPOSALS
As a result of Government legislation defined benefit pension schemes which currently contact out of the State Second Pension will no longer be able to do so from April 2016. Both members and employers will see an increase to their National Insurance Contributions (NIC) of 1.4% and 3.4% respectively as the rebate associated to contracting-out is abolished.
While members will have no choice but to accept the increase in NICs, the Government has put in place legislation which will allow employers to recoup their additional payroll cost by either changing future service benefits or/and increasing contributions.
Freightliner management have informed the RMT that they intend to recoup their additional payroll cost which they estimate to be £1.6m per annum. Following discussions with our representatives’ management have made the following proposals:
- Cost Neutral Early Retirement Factors (CNERF) to age 62 for non-protected members
- Pensionable pay increases capped at RPI + 0.60%, with any increase above the cap being pensionable for future service only. This change affects protected, indefeasible right and non- protected members.
Management have indicated that these proposals will recoup the full amount of their additional payroll cost associated to contacting-out. These proposals will also reduce the Joint Contribution Rate for members and the employer.
This item was placed before the National Executive Committee on 16th February where the following report was adopted and noted:
“That we note the employers contracting-out proposals which are similar to that of the TOCs which have already been accepted by this union.
We also note the reduction in the Joint Contribution Rate which is a result of these proposals.
Therefore we note the correspondence on file.”
I will keep you informed of developments.