You are:

News

Return to news listings

Amey Consulting: Owen Williams RPS

25 January 2012

To advise members on the latest Tri annual review and the proposals from Amey as a result of the valuation up to the end of December 2010 on the Owen Williams section of the Railway Pensions Scheme (RPS).

 2010 Valuation

Every 3 years there is a valuation carried out on all the sections of the railway pensions scheme to monitor their funding levels. The overall objective of this exercise is to ensure that the various sections have enough funds to pay out the overall projected costs, in other words have enough to pay your final salary pensions. Due to the financial climate many schemes have had problems ensuring that they are fully funded.

The company provided us with information in January 2012 outlining that the 2010 valuation, showed the scheme as 107%, funded which has decreased since 2007 when the scheme was 110% funded. The company has also advised that the trustees of the scheme also requested further information of the position of the scheme in September 2011, this showed that the scheme was 102%, funded. Whilst it is good that there is currently no deficit or shortfall in the scheme the valuation also showed that the future costs of the scheme are currently estimated to be 30.2% of section pay. If split on a 60 (employer): 40 (employee) basis this would mean contributions would be 18.12% for the employer and 12.08% for the employee.

What has happened in previous years?

After the 2007 valuation the scheme was 110.7% funded. Whilst the future costs of the scheme were estimated to be 32.4% or 19.44% employer and 12.96% employee. A decision was made to use the surplus to keep contribution levels low and keep employer contributions at 7.5% and employee contributions at 5%.

How does this impact on me?

Since December the trade unions have been meeting with the company to go over their proposals although TSSA only received the full details of the Owen Williams scheme’s valuation in January 2012. The company has advised that they don’t feel that the surplus is big enough to justify the lower contribution rates and must now look to ensure that the future costs of the scheme are funded through increasing contribution rates.

The company originally proposed increases to contributions as follows:

Date

Employee contribution

Employer Contribution

Current rates

5%

7.5%

From July 2012

8%

18.12%

From July 2013

10%

18.12%

From July 2014

12.08%

18.12%

TSSA made representations that this increase over such a short period of time would represent too high an increase for some within the scheme. We were concerned that these increases wouldn’t be affordable for members and there was too high a risk that members would drop out of the scheme, passing on the costs to those still contributing into it. As a result the company have amended their proposal to increase contributions over 4 years:

Date

Employee contribution

Employer Contribution

Current rates

5%

7.5%

From July 2012

7%

18.12%

From July 2013

8%

18.12%

From July 2014

10%

18.12%

From July 2015

12.08%

18.12%

In both scenarios the company have proposed paying their 60% share from July 2012 whilst stepping increases to employee contributions over a number of years.

We need your views

Whilst these changes will impact on members we have to take on board the fact that the company are prepared to pay increased contributions from July 2012. The company has also taken on board previous feedback from the previous pay capping exercise and has decided not to propose any further changes to the benefits that you will receive from the scheme.

In a climate where more and more pensions schemes are either being shut or both funding and benefits of schemes are being drastically altered we believe that having the assurance that a Final Salary scheme brings is worth considering. We don’t feel that we can recommend this offer but are asking you to complete a quick online survey to make your views known to us https://www.surveymonkey.com/s/OWRPS

The company have asked for a response before 31st January and whilst this timing is not ideal we still wanted to gauge members opinions before responding to the company formally. Please do your best to complete the survey by 12 noon on Monday 30th January. Whatever happens the company will still be obliged to hold a 60 day consultation with members to demonstrate to the trustees that they have fully engaged with members of the scheme before putting in place any measures.

Return to news listings

Join TSSA

 

 

Directory