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Freightliner section: Railways Pension Scheme eligibility to join

23 January 2019

Further to TSSA communications to members on 7 January 2019 and following an 'Avoidance of Dispute' meeting with the company on 7th January 2019, where we again made it clear that the company proposals are totally unacceptable.

 Freightliner have now written to TSSA with their proposals for consultation.

The company have previously stated that they wish to make the following changes:

1. Existing employees who have not yet joined the RPS to have the opportunity to join the Freightliner section of the RPS which will run until 28th February 2019. If they do not join the section by this date they will then have a one off opportunity to join on 1st April after completing 5 years continuous company service. Those with more than 5 years company service will not be permitted the opportunity to join this section of the RPS.

2. New employees will not be permitted to join the RPS until they have completed 5 years continuous company service unless they are beginning their employment with Freightliner directly after leaving another railways employer and were already an active member of the RPS.

Freightliner still wish to limit access to the RPS for new joiners.

The company have stated that they need to make these changes now because of increasing pension costs so that they remain commercially competitive. We believe this to be nothing more than a smokescreen to increase the profitability of the business at the expense of their employees.

As you will no doubt be aware every three years the Freightliner Pension Scheme has to be valued and the contribution rates going forward agreed. The contribution rates for the last valuation in 2016 have been agreed. Therefore, if the company were so concerned about the future cost of the pension scheme then why did they agree to Schedule of Contribution?

The Company have also said they are concerned about the risk the increasing pension liabilities are placing on the business. While it may be true that the liabilities are increasing the fact is that the Freightliner section of the RPS is a well-funded section of the RPS. Currently the section is in surplus with over 100% funding level.

I need to remind you that this positive funding level is as much to do with the changes which were made in 2018, in respect of the introduction of a CPI pensionable pay cap. Therefore, you the members, have helped put your pension scheme in a positive position.

The Company want you to believe that because many other employers in UK have closed their Defined Benefit (DB) pension schemes that it somehow right that they should make this type of proposal. This is not the case. Many employers in the UK continue to operate affordable and decent DB pension scheme and are committed to ensuring that their employees continue to benefit from such arrangements. This is not a race to the bottom as the Company want you to believe.

We believe that the company may want to ultimately eliminate their pension risk by forcing new employees into some inferior pension arrangement. It is our view that if the Company implement this proposal, they may at some point want to close the Freightliner section of the RPS to new entrants.

Therefore, because the RPS is Shared Cost, where you pay 40% of the past and future costs and Freightliner pay 60%, this proposal if implemented would be nothing more than a disaster for members, as in our experience once a pension scheme is closed to new employees or fewer members join, the funding level will go down which will result in contributions increasing for members. This could potentially lead to members leaving the pension scheme as the section becomes unaffordable.

The TSSA Executive Committee have authorised balloting for industrial action if the company continue with their proposed changes to the RPS.

It is important to recognise that while the company may argue that their proposals will not impact on present members’ benefits or contributions, this is not true. The fact is that the less contributing members in the Freightliner section of the RPS, the bigger the risk on your future pension rights and contributions. This is your deferred pay.

We need to know your views:

Are you prepared to take industrial action (strike action or action short of strike action) to defend pension rights at Freightliner?

Please send comments this week to rylahc@tssa.org.uk

Look out for meetings being publicised by our sister Trade Unions, but in addition, we will also be contacting each TSSA member if we go ahead with balloting for industrial action.

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