The unions believe that the RPS is under threat and members need to be alert and informed. We are calling on employers to:

* Cap employees contributions to 10.56 per cent
* Keep benefits at their current level
* Streamline the scheme
* Open the scheme to all employees

RAIL UNIONS UNITE TO DEFEND YOUR PENSION SCHEME

Thousands of workers past and present, who have an interest in the Railways Pension Scheme (RPS), need your help. The rail industry unions ASLEF, CSEU, RMT and TSSA are backing a major campaign to safeguard workers? retirement benefits.

WHY KEEP THE SCHEME OPEN TO ALL MEMBERS?
The more contributors to the scheme, the more people there are to build up the pension funds, so keeping the scheme open to everyone will benefit all in the scheme long-term. It?s also fair to all workers in the industry.

What next?
The unions have agreed to work together and not to enter into agreements with employers unilaterally. We have written to the government, to the trustees and to all the major employers. As employers have until the end of June to work out how to deal with pension deficits, the three general secretaries will address meetings across the country. We say we should fight to protect our pensions: Cherish the past. Protect the future.

All the railway unions defending your pension scheme

GENERAL SECRETARIES MEETINGS
Date Venue
9 March Cardiff
21 March York
28 March Glasgow
29 March Edinburgh
3 April Birmingham
5 April Bristol: 18.30 hrs, GWRSA Railway Club, Lower Incline, Bristol Temple Meads
10 April Perth (at STUC)
19 April Manchester
20 April London

THE UNIONS BELIEVE THE RPS IS UNDER THREAT AND MEMBERS NEED TO BE ALERT AND INFORMED. WE ARE CALLING ON EMPLOYERS TO:
? CAP EMPLOYEE CONTRIBUTIONS TO 10.56%
? KEEP BENEFITS AT THEIR CURRENT LEVEL
? STREAMLINE THE SCHEME
? OPEN THE SCHEME TO ALL EMPLOYEES

What is the threat?
A pension scheme needs enough money to pay for existing benefits and those that will accrue in the future. Actuarial valuations of the various RPS sections indicate a shortfall (or deficit): there just isn?t enough money to pay all railway workers a decent pension. Many employers think the solution is to implement massive hikes in employee contributions and cut back on future pension benefits.
In other words, Pay more and get less!

Why is this a threat?
In most sections of the RPS, employees will be expected to increase their contributions significantly. If this continues, workers could be forced to drop out of the scheme if they can?t afford it. This will also increase the financial burden on those who remain in the scheme and the funding problems will get even worse.

Significantly, the workers who are hardest hit, will be the lowest-paid, for whom any further bite out of the wage packet has a disproportionate impact.

Cutting back on pension benefits decreases the overall value, making it less attractive, so members see little advantage of being in the RPS. Falling membership and reduced rewards could lead to a vicious circle where the RPS disappears forever.

Why do we need to campaign?
The unions have approached the major employers in the industry. We explained to them about the problems the RPS faces but it appears to have fallen on deaf ears. So we need to turn up the volume. Every union member with a vested interest in the RPS needs to let the employers know how strongly they feel. Keep up the pressure on companies to keep contributions at an affordable level.

WHY CAP EMPLOYEE CONTRIBUTIONS AT 10.56%?
This was the rate paid under the original BR scheme, before contributions were reduced at the time of pension fund surpluses in the late 1980s. It is considered to be a reasonable level of contribution to provide for a good package of pension benefits.

Contributions higher than this could prove too expensive and lead to large numbers of members dropping out of the RPS.

WHY KEEP BENEFITS AT THEIR CURRENT LEVEL?
Pensions are deferred pay, and like all your terms and conditions of employment, they are negotiated between the employers and the trade unions. The cost of future benefits is not the problem, it?s the cost of clearing the deficit.The problem with the current structure of the RPS is the deficit created by the actuary changing his assumptions from previous evaluations, for instance, on lifespan.

Cutting back on pension benefits will make the RPS less attractive to new and existing members, which means that fewer staff will want to join the scheme and more people will drop out.

WHY STREAMLINE THE SCHEME?
Privatisation of British Rail led to the creation of one of the most complex pension schemes in the UK. There are now about 100 sections. These have different rates of contribution and benefits and there are huge administration costs linked to each one. It makes sense to streamline the scheme, it will be easier to run and cut out unnecessary costs. Streamlining could also lead to a standard contribution rate.

THE UNIONS WANT THREE OPEN SECTIONS:
? A train operating section
? A infrastructure and
engineering section
? An omnibus section

Taxpayers including RPS members will save money, by not picking up the bill for valuations when franchises or other contracts change. And, in an industry where workers often move between companies, an integrated scheme is simpler for workers, employers and the administrators.

What you can do:

* Click here to download campaign leaflet (PDF file)
* Ask your MP to sign Early Day Motion 1681 in defence of the Railways Pension Scheme
For further information about this campaign, contact Nick Cole at RMT on 020 7529 8806 or click below to view a briefing paper on the scheme.

Joint Rail Union Briefing Paper:

Railways Pension Scheme

1. The threat to rail workers pensions

1.1 The old member contribution rate for the BR Pension Scheme prior to the surplus declared in 1988 was 10.56%.The valuations of the various sections of the Railway Pension Scheme (RPS) were declared late last year with the results showing around two thirds of sections had significant short falls that are much higher than at the last valuation in 2001.

1.2 Although the member contribution rate for three of the Train Operating Companies is lower than ten per cent, most are nearer 11 per cent and the highest 18.65 per cent. For Engineering/Infrastructure Sections the situation is even worse with default rates ranging between 11.02% and 21.12%. Alarmingly several have rates in excess of 14%.

1.3 The new rates will be introduced with effect from 1st July unless alternative arrangements are agreed.

2. Reasons for the Pensions Shortfall

2.1 Complexity and multitude of sections in the RPS (circa 100).

2.2. These deficits have arisen partly through poor financial returns, but also as a result of the Actuary changing mortality assumptions on the basis that pensioners are living for longer.

2.3. This is compounded by the Actuary also deciding that any deficits must be repaid within nine years rather than over a longer period.

2.4 Joint employer/employee contribution rates for sections where the employer has closed the scheme to new entrants are 3% to 4% higher than for open sections. This means that for individual workers in these schemes their actual contributions have increased by up to 40%!

3. What this will mean for railworkers

3.1 The rail unions are concerned that members will be unable, or unwilling, to pay ever higher contributions, as there is a finite limit to the increases individuals are able to absorb before deciding that the Scheme is unaffordable.

3.2 Each individual opting-out means deficits become the responsibility of fewer members, thus increasing contributions further for those who remain.

3.3 If those who opt-out are predominantly younger members, the average scheme age would rise, requiring additional increases to compensate for the Section's older age profile.

3.4 These events could result in an uncontrolled spiral of increased costs and reducing membership.

3.5 The unions are also aware that behind the scenes many employers are discussing closing the RPS and introducing inferior arrangements. They want people to work until 65, only have inflation proofing of 2.5% instead of full RPI, have pensions based on the career average earnings instead of being based on the final year's salary, and no ill-health benefits.

4. Why rail companies and Government have a responsibility to act.

4.1 Employees recruited since privatisation would not have realised contributions could continue to rise inexorably. Even those protected members who understood the possibility of fluctuating contributions would not have anticipated becoming responsible for deficits attributable to pensioners and deferred members arising from changed actuarial assumptions.

4.2 All the current railway employers have enjoyed surpluses built up during the latter BR years when thousands of railway staff left the industry in preparation for privatisation. It is totally unfair to expect existing members to pay higher contributions merely because the Actuary's assumptions have changed, or because the employer has taken a business decision to reduce employment costs by closing their Section to new employees.

4.3 Even worse is the fact that some members have been placed in closed Sections with higher contribution levels following reorganisation of franchises by the Government. 

4.4 Professor Jean Shoal of Manchester University has calculated that since privatisation around £800m a year is taken out of the industry as returns to private lenders and investors. The rail unions believe that but for privatisation contributions would be kept to a realistic and affordable level.

5. Solution to the pension crisis

5.1 The rail unions are embarking on a major campaign in support of the RPS. We have four key demands.
·       Cap employee contributions at 10.56%;
·       Keep benefits at least at their current level;
·       Streamline the scheme to have three active sections (Train Operating Section, Engineering & Infrastructure Section and an Omnibus Section); and
·       Keep the scheme open to all employees.

5.2 We believe these are entirely reasonable demands. The employers could bear responsibility for any additional contributions and recoup any overpayments from future surpluses.

5.3 The Actuary has indicated that in future years his proposed contribution rates have a 70-75% chance of producing a surplus. Therefore, it is not unrealistic to expect the employer to take up a greater part of any current shortfall. Companies are also able to offset additional contributions against corporation tax.

5.4 The pensions system could be made more efficient and secure by the RPS reverting to being one fund rather than individual sections. As a means of moving towards that situation we are proposing one Section for the TOCs, one Section for Infrastructure/Engineering Companies and one Omnibus Section covering the remaining employers. The 1994 Pensioners Section - the section for pensioners at privatisation - would continue as at present.

6. Action required by the rail companies and Government

6.1 Prior to Christmas a joint letter signed by the rail unions was sent to ATOC rather than contacting individual Train Operating Companies separately in the hope that they would agree to our proposals as a way forward and the best way of facilitating affordable pension provision within the railway industry.

6.2. ATOC has refused to meet us and similar joint letters were also sent to Network Rail and the Engineering companies. Responses received have been disappointing. It is clear the employers want to continue raking high profits out of the railway and anything which reduces those profits is of no interest.

6.3. There is also the difficulty that the length of franchises / contracts act as a disincentive for Train Operating Companies and other rail contractors from taking on the liability of additional contributions now and recoup any overpayments from future surpluses in the future. For example South West Trains franchise ends next year and this company has a £45m deficit in its scheme.

6.4. The Government, as ultimately being responsible for railway franchises, could take a role by providing comfort letters to the Actuary to allow for deficits to be repaid over a longer period than the five years currently being proposed. In addition, ensure an end to closed schemes and agreeing to proposals to streamline the current multitude of schemes into three active sections.