RPS TOC Sections 2016 Actuarial Valuation – Intervention by the Pension Regulator

My Ref: MRP 1/8/1

30th January 2020

Circular Num: NP/021/20

To: The Secretary All Branches & Regional Councils

Dear Colleagues,


I refer to Circular NP/098/19, 31st May 2019, as previously reported the Railways Pension Scheme (RPS) 2016 Actuarial Valuation for Train Operating Companies (TOC) is still to be finalised due to the intervention of the Pensions Regulator (TPR). While I can report that talks are still ongoing between TPR and the RPS Trustees you may have read a recent article which appeared in the Financial Times on 8th January 2020 which asked why are railways pensions, i.e. the RPS, so “toxic” and suggested that the RPS should be closed with railway workers’ being offered inferior Defined Contribution pension arrangements instead of a final salary scheme promise.

While it is true that many of our members across the railways are still members of the final salary pension scheme in the shape of the RPS it is a fact that there are thousands of railway workers who do not enjoy such benefits. While the RMT has done everything to protect our members retirement benefits since the railways industry was privatised in 1994 it is Government policy and opportunist employers across the industry, who have closed their pension sections to new entrants, who have caused the most damage to the RPS.

Indeed, the RMT has at times reluctantly agreed to change future service benefits, such as increasing the retirement age or contributions, to keep RPS sections affordable and indeed open to new employees. The Financial Times article suggests that stakeholders of the RPS, which includes unions, have done very little to keep the RPS affordable and sustainable which could not be further from the truth.

This inaccurate attack was partly provoked by our members’ defence of safety on South West Trains and as previously reported the Department of Transport decision to disqualify Stagecoach from bidding for three railways franchises as a result of them putting in non-compliant franchise bids. However, the majority of the article concentrated on attacking the very core of the RPS and how it is actuarially valued which has been stirred up by the Pensions Regulators TPR intervention into the RPS 2016 Actuarial Valuation of Train Operating Companies (TOC) sections.

As reported the initial 2016 Actuarial Triennial Valuation results revealed that TOC sections were in surplus but the TPR raised concerns with the RPS Trustee Board that the assumptions used by the scheme actuary were over overstated. The Financial Times article suggests that the scheme actuary has a “magic pencil” to over inflate assumptions which is frankly nonsense. Such assumptions can only be based on logic not magic.
Contrary to the views expressed in the article that the TPR’s intervention is in some way due to the RPS being badly run, or some form of magic, it is a fact in our view that TOC sections and the RPS in general is well run and generally well-funded with members paying their share of the past and future cost.
I will reiterate the unions position that that if TPR intervention results in TOC sections moving from surplus to deficit the RMT will do everything within its powers to defend our member pension rights whether this be attacks on contributions rates or/and changes to future service benefits.
However, as you will be aware the RMT and TOC employers have been discussing TPR intervention for a number of months through the joint Pensions Working Group and it is hoped that an agreeable solution can be found which will result in the conclusion of the 2016 Actuarial Valuation.
Of course, there is a simple answer to the articles suggested “pass-the-parcel” of pension deficit’s which is where one franchise holder passes on a pension deficit to the next franchise holder and that is bring the railways back into public ownership. This of course is something the author of the Financial Times article doesn’t consider once.
I will keep you informed of developments.

Yours sincerely,


Mick Cash
General Secretary