FAQ

Yes. If a non-protected member were to retire at age 55 (the minimum age you can currently start claiming your pension), then the pension built up before 1 April 2016 would be reduced to reflect that it is being paid 5 years early (compared to age 60). The pension built up after 1 April 2016 would be reduced to reflect it being paid 7 years early (compared to age 62).

For a protected member, or for a member with indefeasible rights, the entire pension would be reduced to reflect that it is being paid 5 years early. Protected and indefeasible rights members have the option to increase the age at which benefits built up after 1 April 2016 are payable to age 62. If they choose to do this, they will pay lower member contributions.

No.  Benefits will be calculated at 31 March 2016 based on your pensionable pay and pensionable service at 31 March 2016.

Under the proposed structure, any pay rises that you get will increase the pension you build up in the future, but the increase in the salary used to calculate the pension you built up before the pay rise will be capped.

If your pay rises were to always be underneath the cap, then this would have no impact on your pension at retirement. 

If, however, some (or indeed all) of your pay rises were to be above the cap, then your pension at retirement would be lower than it would if these changes were not implemented.

With the proposed changes, the pension scheme will calculate a capped pensionable pay for each benefit year.  This will be the actual salary in the current year, increased in line with the lower of the percentage increase in salary for the year and the pensionable pay cap in each year to retirement.

The Government is making fundamental changes to the State Pension from April 2016.  The changes, and the impact on you, are complicated and we're not able to tell you exactly how you might be affected, but we have given you a brief, and simplified, overview below.

The current State Pension system

Before April 2016, there are two levels to the State Pension in the UK: the Basic State Pension, and the State Second Pension (which used to be known as SERPS).

Most employees build up a Basic State Pension.  Many employees also build up the State Second Pension, but not all.

Employees who are members of "contracted out" pension schemes, such as the Railways Pension Scheme, do not build up a State Second Pension.  Instead, their company pension scheme is designed to offer at least the same benefits as the State Second Pension that would otherwise have been payable.  In return for building up less State Pension, the employee (and their employer) pay a lower rate of National Insurance.

What's changing?

The Government have decided that, from April 2016, the two-level State Pension system will be replaced with a "Single Tier" State Pension.  This means that there is no State Second Pension from which to contract out.  In turn, this means that employees and employers can, from April 2016, no longer pay lower rates of National Insurance.

And where does the Railways Pension Scheme fit in?

Since employees and employers are paying higher National Insurance from April 2016, it was agreed that changes should be made to reduce the cost to employees and employers of funding the Railways Pension Scheme.  The proposals that we have outlined are the result of discussions between employers and trade unions as to how best to achieve these cost reductions.

How much will my National Insurance change?

For most employees, National Insurance rate will increase by 1.4% of "relevant earnings" (at the time of writing, this is earnings between £155 per week and £770 per week).

Within our proposal letters, and this website, we refer to "Protected Members", "Members with Indefeasible Rights" and "Non-Protected Members".

Due to legislative requirements, these categories of member are affected differently by the proposals.  It's important for you to understand which type of member you are, so that you understand the impact on your pension of the proposals.

What sort of member am I? 

If you would like to check what sort of member you are, you can look on your most recent benefit summary from RPMI, or you can contact RPMI directly to find out.

What are the differences between the types of member?

RPMI have a guide to the differences between these types of member on their website, which can be found at:

https://www.railwayspensions.co.uk/docs/default-source/read-as-you-needs/active-rayn/db-actives-protected-rights.pdf

No.  If you choose to retire early, then you will be able to do so - though at the moment, there is a minimum retirement age of 55 (this is set by the Government).

If you are a Protected member, or have Indefeasible rights, then you won't automatically move to Normal Retirement Age of 62 - though if you choose to, you will have a one-off chance to do so.

If you move to Normal Retirement Age of 62, then it's important to remember that the change only applies to pension built up from 1 April 2016:

• If you chose to retire before age 60 (at, say 57), then:
  - the pension built up before 1 April 2016 would be reduced for the number of years under 60 you were (in this example, 3 years early)
  - the pension built up from 1 April 2016 would be reduced for the number of years under 62 you were (in this example, 5 years early)
• If you chose to retire between age 60 and age 62 (at, say 61), then:
  - the pension built up before 1 April 2016 would be payable unreduced
  - the pension built up from 1 April 2016 would be payable for the number of years under 62 you were (in this example, 1 year early)
• If you chose to retire after age 62, then your pension would be payable unreduced

No.  Under the proposals, there is no option available to pay higher pension contributions in return for a lower retirement age.

No.  Protected or Indefeasible Members have a one-off opportunity to choose to opt-out of their protection which is irrevocable even if their circumstances change.

No.  Under the proposals, there is no option available to pay higher pension contributions in return for a lower retirement age.

Final Salary Schemes are a type of defined benefit pension scheme – the Railways Pension Scheme is such a scheme. A final salary scheme offers you an income in retirement based on how long you were a member and how much you were earning (your “final salary”). 

The Government is making fundamental changes to the State Pension. If we did not make changes to the Railways Pension Scheme, then the cost of providing pensions would increase significantly. These changes are intended to recover this additional cost.

Unfortunately, we are not able to provide specific illustrations for you. If you would like information about your current benefits, then please contact RPMI who will be able to help you.

The scheme year will run from 1 April to 31 March.  The cap will be applied each 1 April, and be based on the RPI (Retail Prices Index) measure of inflation in the year to the preceding September.

The cap will be applied each year, rather than on a cumulative basis.  This means that the cap will be applied each year, rather than averaged over your career - you won't be able to have a higher increase in one year because you were under the cap the year before.

No. You will still be able to make pension contributions via salary sacrifice.