UK - Members of the Railways Pensions Scheme face a contribution hike of up to eight percentage points a year because of burgeoning deficits.
The scheme’s fund manager, Railways Pensions Management, said some workers would pay as much as 13% of pensionable pay a year – up from the current basic rate of 5%.
The move follows a triennial valuation conducted last year, which found the £12bn final salary scheme – broken into more than 100 employer-sponsored “sections” – was in deficit.
The cost hikes will vary for each section, depending on the extent of the FRS17 deficit found during the next actuarial valuation, which is currently being conducted and is due out at the end of the year.
The Rail, Maritime and Transport Union said it would not be taking industrial action over the increases because the reduced 5% basic rate was implemented when the fund was in surplus, prior to privatisation in 1994.
Technical manager Nick Orton said: “Members and employers have taken a contributions holiday, so we always knew that rate would start to go up at the end of 2003.”
This week's edition of Professional Pensions is out now.
Ben Gunnee reflects on 2018 and talks about the Fiduciary Management trends to keep an eye on in 2019
Lloyds Banking Group secured 630,000 new pension customers last year, according to its 2018 annual results.
Guy Opperman has rejected calls to speed up changes to auto-enrolment (AE) despite increasing pressure to boost contribution rates and overall savings pots.