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Amey: Pensions

14 October 2014

Amey is proposing important changes to the Railway Pensions Scheme (RPS). TSSA reps need to hear the views of union members on pensions please talk to your reps, and complete the on-line survey even if you are not in the RPS.

https://www.surveymonkey.com/s/AmeyPen14

The key developments

· Discussions have been ongoing between TSSA reps and Amey regarding the latest valuation of its RPS sections. Amey has two RPS sections, entitled ‘Amey Rail’ and ‘Owen Williams’. The company has written to all staff that are members of RPS to begin a 60 day consultation period (which closes on 26 November) regarding possible changes. TSSA views this move as premature on the basis that discussions are still on-going, and there is no agreement as yet as to what actions need to be taken.

· Members of the RPS have already seen their pensionable pay increases capped, which will still be at the relevant Retail Prices Index (RPI) figure +1% for the pay award in 2015.

· Amey has stated that it intends to remove many of its staff from the RPS. Such a move would dramatically reduce the pensions of those removed, but would also have a potentially serious impact on those that have the legal right to remain in RPS as it may result in those affected paying much higher contribution levels, thereby reducing their ‘take home’ pay and making it unaffordable.

· The ‘Amey Rail’ section of RPS has been valued as having a large funding deficit which must be addressed.

· Amey is proposing to reduce pensionable pay still further in real terms from 2016. It would do this by tightening the ‘cap’ on pensionable pay increases still further by limiting increases in pay that are pensionable at the Consumer Prices Index (CPI) figure. It has suggested as an alternative that it may cap pensionable pay increases at 2%. Either way, pensionable pay will get progressively smaller in real terms as it will not keep pace with the RPI figure, considered to be a more accurate reflection of inflation than CPI. This means staff receiving a pension which will be significantly short of one based on the final salary.

· Amey propose holding employee contributions at 10% for those in the ‘Owen Williams’ section until the 2019 valuation although they may propose a reduction in pension benefits in the meantime.

· Amey propose holding employee contributions at 12% for those in the ‘Amey Rail’ section until the next valuation in 2016.

· The ‘Owen Williams’ section is in surplus – but Amey is clearly considering capping pensionable pay still further, which means an even smaller pension.

· Amey is also considering the transfer under TUPE of all staff currently employed by either Amey Rail Ltd or Amey (OWR) Ltd to Amey Services Ltd. They say this would enable Amey to save money, will potentially pave the way for a future merger of the sections and will put all RPS members under the same employer. TSSA believes this could undermine any agreements reached now over pensions, but this may also have a number of adverse consequences for other contractual terms and conditions.

· Amey is proposing to introduce so-called ‘SMART’ pensions which reduces both employer and employee National Insurance contributions, and which will reduce by a little the hit on staff through increased pension contributions and reduced ‘take home’ pay - possibly sweetening some of the rather bitter measures it is considering!

More details

All RPS sections were actuarially valued on 31 December 2013, as they are every three years. The purpose of the actuarial valuations is to determine whether or not there are deemed to be sufficient financial assets in each of the RPS sections to meet past and future pension liabilities, in other words if there is enough money to keep paying pensions!

The actuarial valuation reflects a number of factors, including the projected income from pension contributions (RPS contributions are shared between employees (40%) and Amey (60%)), the financial stability of the employer, the performance of the financial markets and the global and UK economies, and assumptions about future life expectancy, pay rises, and the rate of inflation.

If any of the RPS sections are valued as being in deficit (therefore thought not likely to have enough money to pay pensions), action may be required in order to address the shortfall, which typically means increasing contributions from both the employer and the employees, or restricting pension payments and benefits, or a combination of these.

Amey Rail funding has on this basis been calculated at 81.5% of its calculated liabilities, worse than the 2010 figure of 86% despite pay capping and an increase in employee contribution rates up to 12.08%.

TSSA’s position

TSSA and its reps are committed to ensuring that our members’ pensions remain safe and affordable. The following alternative proposal has therefore been put to Amey:

· A pay cap of CPI or 2% (whichever is greater)

· No further increase in contributions or changes to benefits until after the 2019 valuation (in other words if there is a shortfall then Amey would be obliged to pay for this);

· All staff including those that do not have a legal right to do so are retained within the RPS until at least the 2019 valuation;

· Reviews of the pay cap every 3 years from 2019 onwards;

· Agreement that with the legislative changes from contracting out in 2016 that Amey will not claw back the costs of its increased national insurance payments from either contributions or benefits of the scheme (the law will potentially allow them to do this) – this must be a permanent agreement and not time bound;

· SMART pensions to be offered to individuals on a voluntary basis and not made compulsory;

· Any agreement reached on pensions now must be binding on Amey as a whole, regardless of any transfers of staff between Amey group companies in the future.

Since making this proposal the company has said that it can provide the TSSA caveats if the cap is RPI up to a maximum of 2%. We have written asking for them to outline their proposals in writing and requested clarity that should RPI be negative that this would not impact on Section pay. Your representatives have grave concerns that having a maximum of 2% will remove the link to inflation that our original proposal offers so we need your feedback.

Members are urged to take part in our on-line survey to assist us in ensuring we reflect the views of members in our negotiations with Amey.

Please do this as soon as possible, although we will keep the survey open throughout the consultation period. The survey can be found at: https://www.surveymonkey.com/s/AmeyPen14

Amey are also planning a number of pensions roadshows so please do your best to attend these to demonstrate how important your pensions are to you which may strengthen our hand in future talks.

In order to strengthen our power and influence in Amey, TSSA needs more members, and also your active involvement at every level. If you are interested in getting more involved then please contact Alan Valentine by clicking here . If you can recruit a non-member, they can join on-line at www.tssa.org.uk/join

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