Hull Trains section of the railways pension scheme– ending of contracting-out proposals
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My Ref: MRP 1/8/45 7th July 2016
Circular Num: NP/181/16
To: The Secretary All Branches & Regional Councils
HULL TRAINS SECTION OF THE RAILWAYS PENSION SCHEME– ENDING OF CONTRACTING-OUT PROPOSALS
As you will be aware resulting from Government legislation defined benefit pension schemes which contacted out of the State Second Pension are no longer able to do so. Since 6th April 2016 both pension scheme members and employers have seen an increase to their National Insurance Contributions (NIC) of 1.4% and 3.4% respectively as the rebate associated to contracting-out was abolished.
While members have had no choice but to accept the increase in NICs, the Government has put in place legislation which will allows employers to recoup their additional payroll cost by either changing future service benefits or/and increasing contributions. However, the employer still has to consult with members.
Please note the employer has to seek actuarial advice and cannot recoup more than the rebate.
Hull Trains management have informed the RMT that as a result of the ending of contracting out the employer’s additional wage bill will increase between 2016 and 2018 by £138,133. Management have informed our representatives that they intend to recoup this money and have made the following proposals:
• The Normal Retirement Age to be increased from 60 to 64
• Cost Neutral Early Retirement Factors to apply to all members
• Future pensionable pay increases to be capped at RPI
These proposals are estimated to recoup £128,778 over the next two years (2016/18).
This item was placed before the National Executive Committee on 5th July 2016 where the following resolution was made:
“That we note the report from the lead officer.
We further note that the employers proposals are not to our members’ satisfaction, and that the proposals fall short of those achieved with employers which participate in the Informal Working Pensions Group, in particular in relation to the Normal Retirement Age, and the proposed cap on pensionable pay increases.
We therefore instruct the General Secretary to arrange a further meeting with the employer, lead officer and relevant representatives, with a view to seeking improved proposals.
Relevant Branches and Regional Councils to be advised.”
I have written to management requesting a meeting and will keep you informed of developments