Letter: Guarantees of protection for BR pension funds

Sir: John MacGregor's response (letter, 11 February) to your article on the future of railway pensions is a classic example of obfuscation. Mr MacGregor says 'it would be impractical to allocate pensioners to the successor companies'. No one has suggested that they should be. It is not necessary and the argument is a red herring.

Paragraph 87 of the Government's White Paper, published last July, stated: 'Privatisation will not affect pensions already being paid from . . . British Rail schemes' and 'These arrangements will provide a way of ensuring that the security of rights enjoyed by pensioners now is not undermined . . .'

The rules of the existing funds provide for full index-linking of pensions with an expectation that other improvements, including dependants' pensions, will be forthcoming should the performance of the fund warrant it.

Neither of the options offered to BR's pensioners by the Government provide the same protection that is available now. The first option does not guarantee index- linking. Nor does it provide for the BRB's existing solvency obligations towards the old schemes. The second alternative does guarantee index-linking - but nothing else, and at the price of handing assets of approximately pounds 4bn to the Government.

If the two alternatives were the real choices, it is not difficult to see pensioners opting for a guarantee of index-linking. Some would see this as the Government trying to frighten pensioners into accepting the second option.

Incidentally, the Secretary of State does not address another point made in your original article. The Government seems ready to renege on commitments made in 1980 to meet pension payments relating to pre-1975 pension obligations. If they can do this today, how safe is the guarantee to pensioners to pay index-linked pensions from the Treasury?

Despite Mr MacGregor's assertions, there is a third option. Complete privatisation is a long way off and pensioners can, therefore, remain in their existing schemes, with the possibility of being transferred to the industry-wide scheme at a later date. The present BR funds already accommodate members of old private railway company pension schemes. There is no technical or financial reason why BR pensioners should not be treated in the same way after privatisation.

No one is seeking more beneficial arrangements than currently apply. We are merely attempting to ensure that pensioners are not worse off under a privatised railway than they are today. Mr MacGregor has so far failed to provide this assurance.

Yours sincerely,

JAMES KNAPP

General Secretary

National Union of Rail,

Maritime & Transport Workers

London, NW1