Govt reiterates train operator pension obligations

The government has reiterated that train operators are responsible for paying employer contributions in the Railways Pension Scheme after concerns were expressed over safeguarding members’ pensions.

In responses to a series of written questions, MP for Harrogate and Knaresborough Andrew Jones said that rail operators, including Stagecoach and new East Midlands operator Abellio, are obligated to pay 60 per cent of pension contributions, with employees paying the other 40 per cent.

The questions posed sought assurances on what steps the government was taking to safeguard pensions for rail workers employed by Stagecoach, Virgin Trains and Abellio.

However, its responses made it clear that the government accepts no responsibility for the pensions of rail workers.

Jones stated: “Since privatisation, train operators have always been, and will continue to be, responsible for paying employer pension contributions required under the schedule of contributions applicable during their franchise term. There are no plans to change this arrangement.”

In April, Stagecoach was disqualified from bidding for three UK rail franchises over concerns its bids failed to safeguard the Railways Pension Scheme.

Jones revealed that the Department for Transport (DfT) had “no discussions” with The Pensions Regulator regarding the decision to disqualify Stagecoach from the bidding process.

He said: “All bidders were given the same opportunity to bid compliantly and they were warned not to submit bids which were not compliant. Stagecoach breached established rules and, in doing so, they are responsible for their own disqualification.”

A DfT spokesperson added: “Stagecoach is an experienced bidder and fully aware of the rules of franchise competitions.

“It chose to propose significant changes to the commercial terms for the East Midlands, West Coast Partnership and South Eastern contracts, despite the risk sharing mechanism we offered reducing the financial risk to franchisees from the position they would otherwise have been in.

“Abellio were awarded the franchise after presenting the strongest overall bid which delivers the best deal for rail passengers.”

As a result of its successful bid, Abellio will now take over the employer contribution obligations for those employees in the Railways Pension Scheme.

Jones concluded: “Under the East Midlands Franchise Agreement Abellio will participate in and become the designated employer for the East Midlands section of the Railways Pension Scheme.

“Abellio will be obliged by the Franchise Agreement to pay the employer contributions required under the schedule of contributions applicable during their franchise term.”

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