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Circular No. NP018/10
February 1, 2010
Introduction of Smart Pensions (Salary Sacrifice) – Southern Railway
Southern management has written to employees indicating that they are introducing a Salary Sacrifice arrangement called ‘Smart Pensions’. Employees will be automatically opted-in and must opt-out if they do not wish to participate.
Salary Sacrifice allows employers to make massive savings on their National Insurance costs by excluding pension contributions from NI. Southern will save an extra £400,000 pa unless employees opt out. This money will straight back to shareholders instead of being used to support your pension fund. Employees also make individual savings but these are small in comparison to the large amounts saved by the employer.
The Smart Pensions has not been agreed with RMT or any of the other railway unions. RMT believes management should be paying their £400,000 savings into the Railways Pension Scheme to support the fund at a time when the scheme needs additional assets. At the last valuation in December 2007, the Southern Section was only 99% funded. Since that time the funding level of all RPS sections has fallen and it can be assumed therefore the Southern Section’s funding has been reduced and that contributions will have to rise. If management agreed to put all or at least some of their £400k savings into the RPS, the need for increased contributions would be reduced.
However, Management is putting short term profits ahead of the long term interests of the pension fund. Southern’s accounts for the period to 28th June 2008 showed profits before tax increased by 5% to £44.876m. They paid dividends of £31.53m. The Go Ahead Group’s profits are even higher. In 2008 Go Ahead made profits of £77.2m. Last year it was £61.5m profit, so it could be said that over half of Go Ahead’s profits come from Southern. Now they are after another £400,000.
Join RMT in our campaign against this corporate greed and profiteering from the railway industry. Help to make Southern put pensions before profits by opting out of the Smart Pension. If all our members opt out management’s savings will be reduced significantly.
- download attachment (pdf file)