On the go: Emergency measures introduced by the government – nationalising the railways – mean that taxpayers will be called to fund the Railways Pension Scheme deficit.
According to The Telegraph, the government confirmed that it will support contributions to the defined benefit scheme, which had a deficit of £7.5bn in June 2018.
However, a spokesperson noted that “it does not constitute a Crown guarantee for the Railways Pension Scheme or the long-term assumption of pension liability risk by the government”.
The Department for Transport announced emergency measures to address the current coronavirus crisis. Train companies were given the option of being paid a fixed fee to run services for at least six months or hand franchises back to the government.
The Railways scheme is one of the UK’s largest pension schemes, with £27bn of assets at December 2018, and 344,000 members, including almost 96,000 current employees.
From these, around 102,000 individuals are in sections backed by a Crown guarantee, set up when the pension fund was created in 1994 and which secures the payment of future liabilities in case of wind-up.
The final salary plan has been at the centre of a legal battle, which reached the High Court in January. In an action brought by Stagecoach, Virgin Trains and French operator SNCF, the government is accused of illegally kicking franchises out of tender processes for refusing to accept large risks associated with funding the Railways scheme.
