Letter: Keeping pensions on the right lines

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The Independent Online
Sir: Your article (9 February) about the Government's proposals for BR pensioners and the transfer of funds to the Treasury is plainly wrong and I would like to set the record straight. There are 200,000 railway pensioners and the Government is determined to ensure that their pensions remain secure. It would be impractical to allocate pensioners to the successor companies. At the same time it would not be in the interests of the new railway companies to take on the burden of so many former staff.

So on 12 January I announced to the House of Commons two possible options and followed it up with a published paper eight days later. I sent a copy on the same day to Frank Field because of his well-known interest in this topic.

One possibility is to set aside in a separate fund an appropriate portion of the assets of the BR pension schemes and have them administered on behalf of pensioners. The pensioners would then rely, as they do at present, on the skill of the fund investment managers for their benefits, which in recent years have increased in real terms.

The other possibility is for the Government to take over responsibility for the pensions of railway pensioners on an index-linked basis, which would offer them certainty. If the Government did that, it would make sense if it took over the assets as well.

There is, thus, a choice between complete security and the chance that the fund would do better for pensioners.

The Government does not mind which of these courses are taken; we want to hear, particularly from pensioners and their representatives, which of these options they would prefer. We are quite happy to discuss with them and others the details of the way these options would work.

To present this as an asset-stripping conspiracy is quite wrong. Any division of assets between existing pensioners and employees would have to be done on independent and actuarially agreed terms.

Yours faithfully,

JOHN MacGREGOR

Secretary of State

Department of Transport

London, SW1

10 February

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