YOUR PENSI ON

RMT helpline 0800 376 3706 :: march 2016 :: RMTnews 16 A s a result of government legislation, in the form of The Pension Act 2014 – Single Tier State Pension, Defined Benefit pension schemes such as the Railways Pension Scheme will no longer be able to contract-out of the second state pension (S2P). On April 6 2016 “contracting out” of the S2P will end. This is the practise whereby if a workplace pension meets certain criteria (benefits are generous enough), individuals are opted out of paying into the S2P. The RPS is currently contracted-out. This means that the company and employees receive a National Insurance Contribution (NIC) rebate. The government is now getting rid of the S2P and will introduce a new flat rate Single Tier State Pension. This will mean that there is nothing to opt-out of and therefore contracting-out will cease. In turn both members and employers will pay higher NICs. Employers will no longer receive their NIC rebate of 3.4 per cent in respect of employee earnings between the Lower Earnings Limit (LEL) and the Upper Accrual Point (UAP). Employees will see their NIC increase by 1.4 per cent between these two thresholds. To help employers deal with this additional cost, the government has given them powers to impose changes to schemes to increase employee contributions or /and reduce benefits, in order to recoup the additional costs they will face. The government has introduced legislation which will allow employers to bypass trustee agreement to recoup their NIC rebate from the members’ benefits. Please note they can only recoup the additional costs associated to these changes. 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 YOUR PENSION Understanding the latest developments in contracting out