PENSIONS UNDER ATTACK

RMT helpline 0800 376 3706 :: march 2015 :: RMTnews 20 From April 6 2016 a new Single-Tier State Pension (STSP) of approximately £144 per week which will replace the existing Basic State Pension (BSP) of £113.10 per week and the State Second Pension for those retiring after this date. While the government claims that the STSP will be fairer and offer future a bigger pension at retirement it has failed to mention that this will be at the expense of workers’ company pension schemes which are presently contracted-out. So that the STSP is at no additional cost to the treasury the government is preparing to raid those pension schemes such as the Railways Pension Scheme (RPS) and the Transport for London Pension Fund, which contract-out of the State Second Pension. Under the present system occupational pension schemes can opt-out (contract-out) of the State Second Pension. As a result members receive a National Insurance Contribution (NIC) rebate worth 1.4 per cent (on earning between £153 and £805 a week) and employers 3.4 per cent. As from April 6 2016 this rebate will no longer exist which will mean that pension scheme members will see an increase in their NICs (1.4 per cent) and therefore a reduction in their take home pay. However, while members will have to take this increase in NICs on the chin the government is introducing overriding legislation which will allow employers to recoup their entire 3.4 per cent NIC rebate without the need of trustee consent. In effect what this will mean is that employers after taking actuarial advice can change members' future service benefits, up to 3.4 per cent, or/and increase members pension contributions without the need to get agreement from the trustees. Employers will still need to consult with members and trade unions but once the consultation exercise is finished employers can go full steam ahead and make the necessary changes. Initially the government proposed to introduce an override which would have allowed employers to recoup their rebate from those individuals in privatised industries, such as the railways, who have statutory protection in relation to pensions. After pressure and campaigning from RMT and other trade unions the government backed off from this proposal but have refused to do the same in regards to non-protected persons. Non-protected persons make up approximately 71 per cent (62,000) of contributing members in the RPS and 85 per cent (18,500) in the TfL Pension Fund. While employers will receive ‘special treatment’, allowing them a free hand to recoup their rebate, members could see any state pension gains wiped out by having their occupational benefits reduced for future service. RMT has been campaigning to get the override removed from the pension bill via our Parliamentary group. The union has also met with the Pensions Minister and the Department for Works and Pensions on a number of occasions. Regrettable this has been unsuccessful. The government have stated that this override should only be used as "a last resort where the only other option is to close the scheme", however, employers are already setting themselves up to raid pension funds to claw back, what they see as, their money. NETWORK RAIL One employer that can’t wait until April 2016 to begin recouping their NIC rebate is Network Rail. Management recently informed RMT via the Network Rail Pension Forum that it wishes to begin recouping the rebate with immediate effect. RMT has been informed by management that Network Rail’s additional annual payroll costs associated to the ceasing of Contracting–Out will be in the region of £27 million per annum. NR has, therefore, proposed changing the present cap on pensionable pay increases which is built into the RPS60/65 pension schemes from RPI + 0.5 per cent to a flat rate RPI cap and will come back for any monies not recouped at the end of 2016. This is despite the scheme being fully funded. However, not content with this proposal Network Rail management have decided to link the present round of pay negotiations and the signing off of the 2013 RPS valuation as part of any final agreement. RMT representatives on the Network Rail Pension Forum have made it clear to management that contracting- out, pay negotiations and the valuation results of the RPS60/65 sections are three separate issues and should therefore be dealt with separately. Despite RMT opposition and our sister unions, management have begun consulting with members on their proposal. However, while management is clearly keen to force through their proposal they are unable to do so while they have no agreement in respect of the valuation with the recognised trade unions. Undeterred, management again have again tried to coerce the trade union side into supporting their proposal. Again RMT informed management that there will be no agreement unless all three issues are connected. While RMT waits for Network Rail’s next step other employers are also showing a keen interest in recouping their NIC rebate. Notably those train operating companies. TRAIN OPERATING COMPANIES (TOCS) RMT representatives on the RPS Informal Pension Working Group have reported to us that PENSIONS UNDER ATTACK RMT pensions officer Paul Norris outlines government plans to raid the Railways Pension Scheme and the Transport for London Pension Fund