Southeastern Trains - Salary Sacrifice (Smart Pensions)

Dear Colleague,


Referring to my previous circular NP034/10, 16th February 2010, I reported that Southeastern Trains management had proposed to introduce a Salary Sacrifice arrangement called Smart Pensions.

As you will recall Salary Sacrifice allows employees and employers to save National Insurance (NI) payments on their pension contributions. It works by reducing each individual’s salary by the amount of their contribution of their pension scheme; thus the employees pay is lower and NI contributions are reduced accordingly. However, it needs to be remembered that employer savings are excessively greater than those of employees.

The RMT believe that Employer’s NI savings should be used as extra funding for pension schemes and not for company profits. Therefore the RMT requested that the employers NI savings should be used to help fund the Southeastern Trains Pension Scheme. This request was rejected by management and as a result the RMT began a campaign to change management’s decision.

In support of their retirement benefits many members opted-out of Smart Pensions which sent a clear message to management that employee’s future pension provision should come first before shareholder profits.

As a result of this action and the ongoing discussions between the RMT and the employer I am pleased to inform you that management have agreed to place up to 20% of their future NI savings into the Southeastern Trains Pension Scheme despite this section of the Railways Pension Scheme presently being in surplus. Whilst 100% of employer savings would have been preferred the RMT Executive believes that this concession is significant enough for this union to agree to management’s proposal.

However, it needs to be remembered that Salary Sacrifice does not suit all employees’ personal situations, especially those on low incomes, and therefore those wishing to opt-in should only do so after seeking advice.

Yours sincerely,

R. Crow,

General Secretary