Network Rail shuts pension scheme

Halting the scheme may prompt strikes, the RMT boss has warned

Unions have warned of possible industrial action after Network Rail said it would close its final salary pension scheme to new members.

The not-for-dividend rail firm has been under pressure to trim costs and said the present scheme was "simply unaffordable".

The scheme will be closed from 31 March to new entrants, who will instead be offered a defined contribution scheme.

One union, the Transport & Salaried Staffs' Association (TSSA), said it had been told by Network Rail the reason for the decision was that company pension contributions had risen from £20m to £42m a year.

And Bob Crow, the Rail, Maritime & Transport union chief, said: "The private sector has bled billions of pounds out of the railway industry and now our members are being expected to pay for it."

It is unacceptable that Network Rail staff are to lose out as their pensions become tied to the vagaries of the stock exchange Transport and Salaried Staffs Association's John Munday

He continued: "We all appreciate that there is pressure on companies to close schemes down.

"But with all the money that has been paid into the railway network, we find it absolutely scandalous that from 1 April next year, people coming into the industry will have a worse pension... people are being totally thrown to the wolves.

"We will be saying to the company quite clearly that we do not accept this."

However, employees of rail maintenance companies that are due to move to Network Rail will not lose their pension rights.

Schemes closing

Unions were told late on Wednesday of the Network Rail decision to close its scheme to new employees, while other staff were being briefed on the decision on Thursday.

Final salary schemes are usually thought to be the most desirable type of pension for workers, because a defined payout is guaranteed and the risk that investments disappoint lies with the employer.

In alternative so-called defined contribution, or money purchase, schemes, workers carry this risk, with the amount of pension they receive depending on how well their investments perform.

More than two-thirds of final salary schemes around the UK have been closed to new members in the past five years because companies are finding them too expensive.

'Two-tier system'

Asked whether he would consider balloting his membership for industrial action, Mr Crow said: "We will consider that... as a last resort.

"We will be having a campaign, we will make it absolutely clear that we do not accept a two-tier system for the workforce."

And the TSSA said pensions would fluctuate with the stock market under a defined contribution scheme, rather than guaranteeing a fixed amount based on service and salary as in a final salary scheme.

National negotiations officer John Munday said: "It is unacceptable that Network Rail staff are to lose out as their pensions become tied to the vagaries of the stock exchange."

---

Do you work for Network Rail? What do you think about the pension plans - would you be prepared to take industrial action?