Rail unions begin ballot for strike action over pensions
RMT: May 17 2006
TENS OF thousands of rail workers in dozens of infrastructure and operating companies are being balloted for strike action from today to secure the future of the industry's pension scheme.
RMT today began sending out ballot papers to its members across the rail industry, while TSSA will begin the process tomorrow. Results will be declared around the end of the first week in June.
The move follows employers' failure to give the guarantees sought by the rail unions to avert a pensions crisis in the industry, and threatens to trigger the most comprehensive shutdown the industry has seen in eight decades.
The unions are seeking employers' commitment to ensuring that the Railway Pensions Scheme remains open to all employees, capping employee contributions to a reasonable level, maintaining benefits and streamlining the 100-plus sections created by the fragmentation of privatisation.
"We have asked the employers to negotiate a sensible industry-wide solution to the very real threat of a pensions meltdown and we have asked the government to facilitate talks, but so far we have drawn a complete blank," RMT general secretary Bob Crow said today.
"Our members have made it clear that they will not sit by and watch their pension scheme crumble or pay ever-rising contributions for ever-shrinking pensions, and we are now asking them to translate that determination into a massive vote for industrial action," Bob Crow said.
"The response so far from employers and ministers has amounted to an enormous collective shrug of the shoulders, and that is simply not good enough for workers facing the prospect of poverty in retirement," said TSSA general secretary Gerry Doherty.
"Our conference yesterday unanimously backed the call for industrial action to prevent the Railways Pension Scheme being allowed to collapse by default, and TSSA will begin balloting its rail industry members tomorrow," Gerry Doherty said.
ends
Early Day Motion 1681 in the name of John McDonnell MP and 52 others (at May 16):
"That this House is deeply alarmed at the attempts by railways employers substantially to increase employee pension contributions; notes this will not only be detrimental to rail workers' earnings but will threaten the future viability of the Railways Pension Scheme by forcing existing members to opt out, and deterring new members from joining; is concerned that rail employers are considering closing scheme sections, raising retirement ages and reducing benefits; believes the threat to rail workers' pensions is a direct result of the fragmentation of the Railways Pension Scheme and of employers taking pension holidays; strongly supports the rail unions' campaign to cap employees' contributions, maintain existing benefit rates, simplify the Railways Pension Scheme's structure and open the Scheme to all staff; and therefore urges the Government to do all within its power to protect the pensions of rail workers."
To view the EDM and current list of signatories, please visit http://edmi.parliament.uk/EDMi/EDMDetails.aspx?EDMID=30125&SESSION=875
Railway Pension Scheme - briefing (May 2006)
Why is there a crisis in the railway pension scheme?
Following privatisation, the Railway Pension Scheme was fragmented into a hundred different sections. There are significant deficits in many sections partly through poor financial returns but mainly as a result of the actuary changing mortality assumptions on the basis that pensioners are living longer. Another significant cause of the deficits, however, is due to the structure and exploitation of the Railway Pensions Scheme, namely,
* Professor Jean Shaoul of Manchester University has calculated that since privatisation around £800m a year has been taken out of the industry as returns to private lenders and investors. If just part of these excessive profits were re-invested in the Railway Pension Scheme then contributions would be kept to a realistic and affordable level.
* 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 with the employers cashing in on these pension holidays. Deficits have been compounded by a number of employers closing their sections to new employees. This has increased member contributions by an average of 1.5 per cent.
* The temporary and short term nature of railway franchises and contracts act as a disincentive for Train Operating Companies and other rail contractors from taking a long term view of Railway Pension Scheme costs.
* The fragmentation of the Railway Pension Scheme into a hundred different sections has led to one of the most complex schemes in the UK. This results in massive inefficiencies and far higher administration costs which swallows up funding which could have otherwise be used to reduce scheme contributions.
What has been the employers' and government response?
* The response of many railway employers has been to ask rail workers to make unacceptably high pension contributions, close pension schemes and to propose cuts in pension benfits.
* Since December 2005 the rail unions have written to former Transport Secretary Alistair Darling on three occasions to discuss the pensions crisis. Despite the efforts of the TUC no direct talks ever took place.
* The 100 different rail employers have refused to discuss seriously an industry wide solution to the pensions crisis. They claim it is a matter for the government. The government says it is an issue for the individual rail companies!
What solutions are the rail unions proposing?
Following the failure of months of negotiations, the unions are holding an industry-wide ballot for all rail workers with the following objectives. We believe our proposals will not only benefit rail workers, but will also provide a framework for the more economical and efficient funding of the Railway Pension Scheme. An important consideration when all the railway companies and therefore the Railway Pension Scheme are ultimately dependent on government subsidy.
1. That employee contributions will not exceed 10.56 per cent. This is the rate previously payable in respect of the BR Pension Fund. This rate is above the rate necessary to buy benefits in the majority of sections and allows a margin towards clearing the deficit. Capping employee contributions at a maximum rate means contribution rates would not be subject to fluctuations in stock markets. This will also protect the future of railway pensions and current pensioners because more rail workers will be able to afford to pay into the pension scheme.
2. The Railway Pension Scheme is open to all rail workers. The more contributions to the scheme, the more people there are to build up the pension funds, so keeping the scheme open to every one will benefit all in the long term. It's also fair to all workers in the industry.
3. That there will be no reduction in pension benefits. Many rail employers want to try and solve the railway pensions' crisis by cutting pension benefits. The unions are also aware that behind the scenes many employers are discussing closing the Railway Pension Scheme 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.
However the problem with the Railways Scheme is not the cost of future benefits, which are high but still affordable. The problem is the short term deficit caused by the Actuary changing assumptions.
4. For the Railway Pension scheme to be streamlined into three sections. We are proposing one section for Train Operating Companies, one for Infrastructure/Engineering Companies and one Omnibus Section. It makes sense to streamline the scheme, it will be easier to run and cut out extra costs. Taxpayers will save money by not picking up the bill for valuations when franchises or other contracts change. Streamlining the scheme would introduce economies of scale and facilitate stability, long-term planning and more prudent management - essential pre-requisites of a healthy pension scheme.
Why does the government have a responsibility to act?
The rail unions believe the government have a responsibility to protect rail workers pensions because the rail companies cannot survive without government subsidy. In addition the train-operating companies, Network Rail and their respective suppliers are all de-facto government contracts. It is only the government that can assist in facilitating industry wide talks to resolve this dispute and give the go ahead to moving towards a more streamlined pension scheme.