Defend Your Pension

Submitted by Off The Rails on 15 June, 2007 - 7:58

The Railway Pensions Committee has produced its first report, having scrutinised submissions from trade unions, employers and government. In general, it is a summation of and commentary on those submissions with additional sections covering the historical and legal background.

The unions made three main demands:
1. cap employee contributions at 10.56%;
2. keep benefits at least at their current level;
3. streamline the scheme into three active sections.

On the first two, the report does not say a lot as these are to be addressed in its final report. But its general line at the moment is that you can't have both. It talks of alternatives and cheaper schemes: so either contributions go up or benefits go down.

On point 3, the commission disagrees with the unions, wanting to let companies manage their own affairs. ATOC’s submission simply says that merging the TOC pension fund sections is not viable, giving no explanation. The report tries to put gloss on this refusal but is unconvincing - there would be benefit in doing this but it would require the active involvement of the government in its role as franchise co-ordinator and provider.

Likewise for the proposed engineering and infrastructure section. Network Rail, ultimately the government, could take the lead but again the report tries to excuse inactivity: "The DfT is unlikely to want to engage in discussions on RPS(sca) reform where the underlying rise in the cost of pension provision has not been addressed."

If you couple this statement with the fact that the DfT submission was only two pages long and acknowledged its leading role with respect to TOCs and Network Rail only in passing, you get the idea that the government is trying to keep as far away from this issue as possible.

The report does recognise the dangers of closing sections, and it would not be problematic to let the unions win this one in light of its probable prescription on demands 1 and 2. That is to say any new arrangements would factor in the cost of keeping the scheme open to new entrants while reducing benefits or increasing contributions for everybody.

Consensus?!

In concluding the report calls: "… for the broad principles underlying any changes or alternative arrangements to be embraced on a consensus basis and, for this to happen, stakeholders need to engage constructively with each other now and in the future." In light of the fact that the unions had to ballot for industrial action to even get the government and employers to acknowledge an industry-wide problem and agree to the setting up of a commission, this plea for the opposed parties to "engage constructively" will fall on deaf ears without further threats from us.

There is a problem here that cannot be solved by a commission. At the very least we want to maintain what we have now. Without movement somewhere else that cannot be done, and the Trustees have the power to impose their own solution.
The tone of this report and the climate in which it is produced just forces you to the conclusion that its final report will suggest that benefits are cut. After all, it promises to reveal: "The characteristics of more affordable defined benefit pension provision…".

The unions need to be warning their members about this now. The pension campaign has been put to sleep while we wait for the report but we need to wake up. This initial report should be the spur for us to come up with a strategy for fighting these coming cuts.

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