Pensions deal halts rail strike

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Union leaders hailed a dramatic breakthrough last night in their fight to defend "final salary" pension schemes after a national rail strike was called off.

Brendan Barber, the general secretary of the TUC, said the deal offered by Network Rail showed that it was possible to save "decent" retirement payments tied to employees' salaries.

Bob Crow, the leader of the RMT, suspended the 24-hour walkout scheduled to start at 6.30pm on Tuesday to allow his members to vote in a fresh ballot with a recommendation to accept the offer.

The rail infrastructure company has offered to reopen its final salary pension scheme to new employees after five years' service, including time spent with a sub-contractor before transferring.

Originally the company wanted to introduce a "money purchase" arrangement for new recruits, where pensions are dependent on the performance of the stock market. Mr Barber said of Network Rail's offer: "This is a good deal that shows that final salary pension schemes can be saved."

The deal will encourage other unions to threaten industrial action to defend their retirement payments. Many employers are scrapping final salary schemes, arguing that they are too expensive.

Mr Crow paid tribute to John Armitt, the chief executive of Network Rail, for taking control of the negotiations.

"We had been told we were living in a dream world and that we had no chance of getting this scheme reopened," Mr Crow said. "Mr Armitt has acted very honourably and dealt directly with us."

Network Rail had been planning to take legal action in the High Court today to try to head off the rail strike.

A spokesman for the company said the agreement was "excellent news for passengers, excellent news for Network Rail and excellent news for the country".

A 24-hour strike on London Underground will go ahead as planned from 6.30pm next Tuesday, Mr Crow said. He urged management to hold fresh talks to avert the strike.