Important Pension notice

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Stoneroses

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Please look at the attached photo,
What are your thoughts on this?
 

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Bald Rick

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Which section of the Railway Pension scheme does this refer to? Ie which company?
 

Stoneroses

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Which section of the Railway Pension scheme does this refer to? Ie which company?
RPS Railway Pension Scheme

GTR - it will impact Drivers, Engineers, Station staff, Cleaners and every employee on the pension scheme.

I don't know how many TOC's are part of this pension scheme but it will effect them if they are, I'm sure this goes wider than just GTR.

You can do 40 years full pension, but will lose 6% for every year you retire before the age of 62
 

Bald Rick

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RPS Railway Pension Scheme

GTR - it will impact Drivers, Engineers, Station staff, Cleaners and every employee on the pension scheme.

I don't know how many TOC's are part of this pension scheme but it will effect them if they are, I'm sure this goes wider than just GTR.

You can do 40 years full pension, but will lose 6% for every year you retire before the age of 62

Scheme rules vary by section - ie the employer that arranged the pension. This change will (probably) apply only to members in that section. For example I imagine that staff on ex Southern terms and conditions may be in a different part of the pension scheme than those those ex FCC.

The proposal appears to defer pension age by two years. This will be being proposed in order to help make good a deficit in the scheme. There are other ways of doing this, for example by raising the contributions of both employee and employer, or by limiting the pension benefit in some way (typically by changing what constitutes ‘final salary’, or deferring retirement age for new and/or existing members). As an example, to close the deficit in the NR defined benefit scheme all of these have been done over the past decade, except deferral for existing members.

Two important points in your case, both enshrined in law.

1) this does not apply to those who entered the pension scheme before 5/11/93

2) the trustees of the pension, and/or the company must consult on a proposal such as this. The consultation must be with all people affected (ie people in the pension scheme), and their representatives (the unions). The consultation must last at least 60 days.

If this consultation has been done and closed, and this is the confirmed proposal, there’s nothing you can do to change it, assuming the consultation was conducted within the appropriate regulations. You might want to ask your union how they responded to the consultation, and ask them to check that it was conducted properly. It is not unknown for unions to not fully understand pension changes and accept them without much challenge. It is relatively unknown for pension trustees to make changes outside the law, but it does happen.

If this is a proposal out for consultation now, I recommend talking to your union, and if they don’t know much, potentially seek independent pension advice to enable you to respond to the consultation. Be aware that one pension member responding is unlikely to sway a decision on this, and it will be far better to have an organised collective response with professional advice.

In any response you will need to ask for, or demonstrate, alternatives to help close the deficit. The consultation should have considered these. For example changes could be made to new entrants only - perhaps extending pension age to 65, or requiring 5 years service before joining the final salary scheme (both happened in NR in 2012). This protects existing members whilst making them worse than otherwise for those yet to join.

Please consider all of this as information, and not professional advice.
 

Stoneroses

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Scheme rules vary by section - ie the employer that arranged the pension. This change will (probably) apply only to members in that section. For example I imagine that staff on ex Southern terms and conditions may be in a different part of the pension scheme than those those ex FCC.

The proposal appears to defer pension age by two years. This will be being proposed in order to help make good a deficit in the scheme. There are other ways of doing this, for example by raising the contributions of both employee and employer, or by limiting the pension benefit in some way (typically by changing what constitutes ‘final salary’, or deferring retirement age for new and/or existing members). As an example, to close the deficit in the NR defined benefit scheme all of these have been done over the past decade, except deferral for existing members.

Two important points in your case, both enshrined in law.

1) this does not apply to those who entered the pension scheme before 5/11/93

2) the trustees of the pension, and/or the company must consult on a proposal such as this. The consultation must be with all people affected (ie people in the pension scheme), and their representatives (the unions). The consultation must last at least 60 days.

If this consultation has been done and closed, and this is the confirmed proposal, there’s nothing you can do to change it, assuming the consultation was conducted within the appropriate regulations. You might want to ask your union how they responded to the consultation, and ask them to check that it was conducted properly. It is not unknown for unions to not fully understand pension changes and accept them without much challenge. It is relatively unknown for pension trustees to make changes outside the law, but it does happen.

If this is a proposal out for consultation now, I recommend talking to your union, and if they don’t know much, potentially seek independent pension advice to enable you to respond to the consultation. Be aware that one pension member responding is unlikely to sway a decision on this, and it will be far better to have an organised collective response with professional advice.

In any response you will need to ask for, or demonstrate, alternatives to help close the deficit. The consultation should have considered these. For example changes could be made to new entrants only - perhaps extending pension age to 65, or requiring 5 years service before joining the final salary scheme (both happened in NR in 2012). This protects existing members whilst making them worse than otherwise for those yet to join.

Please consider all of this as information, and not professional advice.
Thank you very much Bald Rick, very in depth reply, lots of thing for me to think about and consider, your response was very helpful.
 

Simon11

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Seems a very generous scheme even after this change?

With the UK retirement age moving to 67 in a few years, being able to retire at 62 on your full Rail pension is still impressive and surprised it was this low?
 

PupCuff

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Our section of the RPS has been standard retirement age 62 for some years now, which you can take early from 57. I must admit I thought it was a national thing, but it may well be the case that some sections have persisted with a retirement age of 60 for a while longer. I was a bit miffed when the unions chose to pass it instead of fighting it, but having said that I've always been aiming to go between 57 and 60 anyway and I've got a few more years to prepare for it in any case.
 

Bald Rick

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The TOC I work for had this change imposed on the non protected staff, we had no consultation on this matter. We signed up to a scheme enabling retirement at 60 then we had the same change as this imposed on us changing the age to 62.

If there wasn’t a consultation then the change is illegal (with some specific exceptions, unlikely to apply for a railway scheme). I’d be willing to bet that there was a consultation, but that you didn’t see it.
 

whoosh

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I thought the change from 60 to 62 took place when the Second State Pension was withdrawn, and the consequent rise in National Insurance contributions for the employer for those who were opted out of this (so the entire railway). These were offset by changes to the scheme to make the employers outgoings similar to what they were before.

Other changes were percentage changes for early retirement, and the loss of 'Final Salary'.
E.g. A person could no longer gain promotion to a Manager and have their whole service pension increased as if their entire employment had been as a manager at the higher salary throughout.
A cap was put on the Whole Service element with anything extra added for future service only as a restructuring premium.

Is the above notice relating to different events than that?
 

Watershed

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Other changes were percentage changes for early retirement, and the loss of 'Final Salary'.
E.g. A person could no longer gain promotion to a Manager and have their whole service pension increased as if their entire employment had been as a manager at the higher salary throughout.
A cap was put on the Whole Service element with anything extra added for future service only as a restructuring premium.
There are final salary sections that are not only allowing continued contributions, but which are open to new entrants - quite how long that will continue is a good question!
 

theironroad

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Please look at the attached photo,
What are your thoughts on this?

This was agreed jointly by at least aslef,RMT and Tssa with all tocs collectively (possibly via atoc as it was then) a number of years ago. However, it was all presented as a done deal and was slid in without much publicity let alone opposition or a ballot.

Iirc, the rationale was that to secure a long term future for the schemes with longer life expectancy, reduced asset performance and a number of other factors, changes had to be made.

The 'normal retirement age' rising from 60 to 62 was the best known part of it as should have been reflected in annual pension statements since.

However, thanks for posting this table as I hadn't realised the % drop per year for going early had risen so dramatically. Certainly a bit of a deterrent to trying to retire early....
 

whoosh

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There are final salary sections that are not only allowing continued contributions, but which are open to new entrants - quite how long that will continue is a good question!

That's what I'm saying - they aren't strictly 'Final Salary' pensions in the Railway Pension Scheme anymore. If you get a payrise above RPI+0.25 (I think it is), including a promotional payrise, then the amount above that figure does not count towards your whole service pension. You'll get a Restructuring Premium only for future year's service for that part.
So if you do 40 years and get good payrises or promotion, your pension is not going to be 40 years of entitlement of your final salary like it used to be.

I'm not surprised by people not knowing these things have changed. Even the Financial Times published an article last year on how costly the Railway Pension Scheme was, citing all the archaic (in their eyes) gold platedness of it - specifically citing all three things:
•Retiring at 60
•Final salary
•Generous early retirement

Completely failing to keep up to date and understand that actually, ALL those things had changed.

I have to say, I only knew about the changes through a group on Facebook.
 

Bald Rick

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I'm not surprised by people not knowing these things have changed. Even the Financial Times published an article last year on how costly the Railway Pension Scheme was, citing all the archaic (in their eyes) gold platedness of it - specifically citing all three things:
•Retiring at 60
•Final salary
•Generous early retirement

Completely failing to keep up to date and understand that actually, ALL those things had changed.

Except they haven’t changed, for some people.

Those who were in the pension scheme before 5/11/93, and have remained in it, have ‘indefeasible rights’ to the pension as full final salary and retirement based on column A in the table shown in the OP.

Those who are in different sections of the RPS may have different arrangements. For example, people in the NR scheme who joined between 1994-2012 have a retirement age of 60, but since 2012 any increases in pensionable pay has been limited to, initially RPI+0.5%, and since 2016, RPI. (Pay rises above that level due to promotion are counted only for future service - in effect an average earnings scheme).
 
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Watershed

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Those who were in the pension scheme before 5/11/93, and have remained in it, have ‘indefensible rights’ to the pension as full final salary and retirement based on column A in the table shown in the OP.
Some may think this is an indefensible right, but in law it is merely an indefeasible right ;)
 

Mag_seven

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For example, people in the NR scheme who joined between 1994-2012 have a retirement age of 60, but since 2012 any increases in pensionable pay has been limited to, initially RPI+0.5%, and since 2016, RPI. (Pay rises above that level due to promotion are counted only for future service - in effect an average earnings scheme).

Yes I remember attending an NR Briefing by a senior manager who after having presented details of changes to arrangements, contributions, etc with lots of graphs and charts was floored by someone asking "So basically you have just announced a change from "Final Salary" to "Career Average"" :lol:
 

Bald Rick

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Some may think this is an indefensible right, but in law it is merely an indefeasible right ;)

:oops: I damn well checked that as well (being a very important distinction!) and autocorrect must have acted retrospectively! Corrected now.

Yes I remember attending an NR Briefing by a senior manager who after having presented details of changes to arrangements, contributions, etc with lots of graphs and charts was floored by someone asking "So basically you have just announced a change from "Final Salary" to "Career Average"" :lol:

There’s actually very few people who understand the detail on pension rules and conditions, so in any briefing through the line management there is a good chance that someone being briefed knows more than the briefer :)
 

whoosh

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Except they haven’t changed, for some people.

Those who were in the pension scheme before 5/11/93, and have remained in it, have ‘indefeasible rights’ to the pension as full final salary and retirement based on column A in the table shown in the OP.

For some people retirement at 60 and favourable percentages for early retirement haven't changed, but my understanding is that everyone in the scheme after April 2016 is subjected to the pensionable pay cap for the 'all service' element of their pension.
In fact this seemed to swing a particularly poor pay deal for East Midlands Trains drivers at the time, which sold their Sundays into the working week for less than £4k as it beat the deadline for this cap.
 

Bald Rick

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One th8ng I omitted to mention earlier.

The changes only apply to future service, future being defined as all benefits accrued after the changes took effect in 2016. Benefits accrued before then are protected as they were before the date.

To make the maths simple, if someone entered the pension scheme in 2006, and worked 20 years, and stayed in the same grade with pay rises in line with RPI, half of their pension would be based on ‘Column A’ and half on ‘Column C’. So if they elected to take their pension at 60, they would get 100% of half of it, and 88% of the other half, as that second half (only) has a retirement age of 62. Ie they would get 94% of the pension.

In reality, the maths is more complex due to people getting promoted through their career etc.

But, the most important thing to say is that this is not losing ‘a ‘substantional amount of your pension fund’, which implies someone is taking away money you already have. It’s a reduction in benefits paid out from future contributions.
 

Mojo

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This took place in April 2016 when contracting out of the Additional State Pension ended. As part of the changes introduced from the start of the 2016/17 tax year, employer NI contributions increased by 3.4%. As part of this, employers were allowed to investigate options to recoup the extra costs.
 

Watershed

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Hi, can I ask where the photo was taken from? Or do you know where I can find that table? Thanks.
The table with Early Retirement Factors (ERFs, the percentage reduction if you take your pension early) is available in chapter 11 of the member guide to each section of the RPS.

The ERFs do considerably differ (particularly for the lower ages) between sections, and there is also variability in the Normal Retirement Age (NRA, i.e. the age at which you will get 100% of your pension).

The SWR member guide can be found here. In case that link breaks in the future, here's a screenshot of the ERF table:

1613589529020.png

The ERFs shown under column A, Schedule 8, would apply for service up to 30 June 2009 in all cases.

If you are a Protected Person Schedule 8 would apply to service beyond that date (until you leave the Section) too. You would typically be a Protected Person if you were a member of the BR Pension Scheme on 4 November 1993 and have continuously worked for the same company - notwithstanding any franchise changes.

The guide isn't 100% clear on this point, but I understand Schedule 8 would also apply if you have the Indefeasible Right. This would typically be if you were a member of the BR Pension Scheme on 4 November 1993 and had remained in continuous employment in the rail industry, but not necessarily with the same company.

The ERFs shown under column B, CNERF60, would apply if you are not a protected person, and do not have the indefeasible right, for service between 1 July 2009 and 31 March 2016.

The ERFs shown under column C, CNERF62, would apply if you are not a protected person, and do not have the indefeasible right, for service from 1 April 2016 onwards.

If you have service that counts under more than one column, you still need to take all of your pension at once. This does mean you lose out slightly, since the Late Retirement Factors are unlikely to be as generous as the penalties provided under the ERFs for early retirement.

In other words, if you had service that counted under all of columns A, B and C, and retired at 60, you would get 100% of your pension accrued under columns A and B, but only 89% of your pension accrued under column C. And if you retired at 62, you would get 100% of your column C pension, but probably not 111% of your column A and B pensions.
 
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theironroad

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Many thanks for that and especially the link to the SWR guide. I've not seen one in a while, though guess it is online.

I'll have a read through at some point.

I did have a quick look online today for the table but couldn't find one, so thanks.

One think I did notice online is a promise from RPS that the 'planner' will finally be returning in the next few weeks which will be useful.
 

Stoneroses

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One th8ng I omitted to mention earlier.

The changes only apply to future service, future being defined as all benefits accrued after the changes took effect in 2016. Benefits accrued before then are protected as they were before the date.

To make the maths simple, if someone entered the pension scheme in 2006, and worked 20 years, and stayed in the same grade with pay rises in line with RPI, half of their pension would be based on ‘Column A’ and half on ‘Column C’. So if they elected to take their pension at 60, they would get 100% of half of it, and 88% of the other half, as that second half (only) has a retirement age of 62. Ie they would get 94% of the pension.

In reality, the maths is more complex due to people getting promoted through their career etc.

But, the most important thing to say is that this is not losing ‘a ‘substantional amount of your pension fund’, which implies someone is taking away money you already have. It’s a reduction in benefits paid out from future contributions.
This was very helpful, I didn't know I could be in more than one column.

As I started in 2000, I am in all three sections.
 
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