Wightlink Pension Fund – Ending Of Contracting

My Ref: MRP 23/4                            5th January 2016
                                     Circular Num: NP/003/16

To: The Secretary All Wightlink Branches,
       Regional Councils & Regional Officers

Dear Colleague,

Wightlink Pension Fund – Ending Of Contracting

As a result of Government pension reforms (Pension Act 2014) the Basic State Pension and the State Second Pension will be replaced for those retiring after April 2016 by the Single Tier State Pension. From this date Defined Benefit pension schemes will no longer be able to Contract-Out of the State Second Pension.  

Therefore employers and pension scheme members will no longer receive the National Insurance Contribution rebate associated to Contracting-Out. Presently Pension Scheme members receive a rebate of 1.4% on qualifying earnings and employers 3.4%.

While pension scheme members will see a reduction in their take home pay the Government has included within the legislation the right to allow employers the ability to recoup their rebate without the need of trustee consent. This will allow the employer to either change future service benefits or/and increase member contributions. Employers will still have to consult with members and trade unions but they would not need agreement.

The Wightlink Pension Fund is one such scheme which Contracts-Out and following correspondence received by the RMT management have indicated that they do not intend to recoup this additional payroll cost.

This item was placed before a regular meeting of the National Executive Committee on 5th January 2016 where the following resolution was made:

“That we note the report on file from the Regional Organiser and the letter from the company.

We welcome managements approach to the Governments pension reforms in respect of the ending of Contracting-Out, and we are pleased that Wightlink have stated that they have no intention to pass on the employers National Insurance Contribution increase of 3.4% to members of the final salary scheme. We therefore note the position.

Relevant Branches and Regional Councils to be advised.”

Yours sincerely,


Mick Cash
General Secretary