BR pension fund 'could be used to aid buy-out'

BRITISH Rail is being advised to use surpluses from its pension funds to pay for redundancies, clearing the way for managers to buy out parts of the network when BR is privatised.

The BR pension fund is one of the largest in Britain with pounds 6.7bn worth of funds and is assessed to be almost a quarter over-funded, which means that its assets are considerably more than is required to pay its pensioners. This enables BR to have a 'contributions holiday', currently worth pounds 100m a year to BR, which last year made a loss of pounds 145m.

According to a document leaked to the Independent, the surplus could be used to pay redundancies which would make management buy-outs more viable. BR has already announced a programme of 5,000 redundancies among its 133,000 staff and further redundancies are expected.

The document is part of a presentation to senior managers who attended one of a series of 35 'MBO seminars' held around the country to encourage them to put in bids.

The document says: 'The pension fund surpluses could be used to aid the funding of a redundancy programme prior to privatisation.' It continues by saying that 'this had been used effectively in the restructuring of the Northern Ireland power stations'. The province's power stations were privatised this year through a trade sale that raised pounds 350m.

With few private companies interested in taking over BR's routes, which are due to be privatised from April 1994, the Government sees a management buy-out as its main hope. To encourage them, John MacGregor, Secretary of State for Transport, has agreed that BR staff would get 85 per cent of the cost of any bid up to pounds 10,000 and 75 per cent of the costs of the remainder up to pounds 100,000, a total of up to pounds 76,000.

A BR spokesman said: 'This document was not part of our presentation. Our view is that it would not be possible to use the pension fund surplus in this way.' The document is thought to have been prepared by the accountants Price Waterhouse, which has been giving briefings at the seminars. Price Waterhouse would not comment.

The Government has promised that staff transferred to franchisees would retain their terms and conditions. However, the document suggests that pension terms are likely to be reduced to those 'comparable in the private sector' and the costs of this would have to be met by the franchisees.

Lew Adams, assistant general secretary of the rail union Aslef, said: 'We now have evidence that BR is more interested in making money out of its pension fund than its need to provide a railway service.'

The use of the pension fund surplus caused BR trouble earlier this year. When BR started its pensions holiday it backdated it to the start of the financial year in April 1991. In fact, such a clawback is not allowed under trust law and BR was told to repay pounds 25m to the pension fund. However, it is repaying the money during the current year, which means that in fact BR made a loss last year of pounds 25m more than its accounts indicate.

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
14 March 2011: George Clooney testifies before the Senate Foreign Relations Committee during a hearing titled 'Sudan and South Sudan: Independence and Insecurity.' Clooney is co-founder of the Satellite Sentinel Project which uses private satellites to collect evidence of crimes against civilian populations in Sudan
people
Sport
Four ski officials in Slovenia have been suspended following allegations of results rigging
sportFour Slovenian officials suspended after allegations they helped violinist get slalom place
Life and Style
More than half of young adults have engaged in 'unwanted but consensual sexting with a committed partner,' according to research
tech
Arts and Entertainment
Balaban is indirectly responsible for the existence of Downton Abbey, having first discovered Julian Fellowes' talents as a screenwriter
tvCast members told to lose weight after snacking on set
Life and Style
A binge is classed as four or more alcoholic drinks for women and five or more for men, consumed over a roughly two-hour period
tech
News
Detail of the dress made entirely of loom bands
news
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

SEN English Teacher

£100 - £115 per day: Randstad Education Bristol: The Job......This role will e...

Primary Teachers Needed in Huntingdon

£21000 - £35000 per annum: Randstad Education Cambridge: The JobRandstad Educa...

Geography Teacher

£110 - £200 per day + pension and childcare: Randstad Education Maidstone: Geo...

KS1 Teacher

£110 - £120 per annum + TBA: Randstad Education Reading: KS1 Teacher needed fo...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice