Thales Transport and Security Section of the Railways Pension Scheme
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THALES TRANSPORT AND SECURITY SECTION OF THE RAILWAYS PENSION SCHEME
The RMT has been informed that Thales management are intending to back track an agreement that they would pay the deficit correction payments needed to reduce the shortfall in the Thales Transport and Security section of the Railways Pension Scheme (RPS). The RMT has not agreed to this outrageous proposal.
Every three years the Thales section of the RPS has to be valued to ensure that there is enough money in the fund to pay all the past and future scheme liabilities (benefits). If there is not enough money in the fund then there has to be arrangements put in place to ensure that over a period of time the scheme is 100% funded.
Following the 2010 triennial actuarial valuation of the Thales Pension Scheme the initial results indicated a shortfall of £26.1 million based on an employer covenant rating of 4. However, following a guarantee from Thales UK backed by Thales SA the covenant rating was changed to a 3. The covenant rating is basically the financial strength of the employer.
As a result of the improved employer covenant rating, the shortfall in the fund reduced to £2.4 million, with a funding level of 88%.
Based on a deficit recovery period of 10 years, the Joint Contribution Rate (JCR) would increase as follows:
· Employer 16.8% to 21.36 (+4.56%) • Member 11.20% to 14.24% (3.4%)
Following consultation in 2012 the employer proposed the following JCR and deficit correction payments:
· Employer contributions 16.8% to 17.82% (+1.02%)
· Member contributions 11.20% to 11.88% (0.68%)
· 10 year recovery plan with employer monthly deficit correction payments of £27,000
Management claim that they agreed to pay the deficit correction payments as a 'goodwillgesture' as they did not want to pass on all the shortfall payments to members. However, they state that theyreserved the right to pass on the member proportion of the deficit payments back to contributing members.
Despite the above proposal being agreed by the RPS Trustees, management are now proposing to increase the JCR from October 2013 in line with the original proposal:
· Employer 17.82% to 21.36 (+3.54%) •Member 11.88% to 14.24% (+2.36%)
The RMT are opposed to management reneging on the agreement to pay the deficit recovery payments and I wish to make it clear again the RMT have not agreed to this proposal. The RMT will be requesting an urgent meeting with management and will take the necessary action to ensure that the original agreement is honoured.
I will keep you informed of developments.