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June 17, 2019, 10:18:46 pm *
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Author Topic: East Midlands, South Eastern & West Coast Franchise Updates April 2019  (Read 1693 times)
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« Reply #45 on: May 10, 2019, 09:31:16 am »

I think I understand why taking on extra pension responsibility would be bad news for train operators like Stagecoach, but I am struggling to understand why it would be bad news for us, the passengers and taxpayers.

Could someone possibly explain the ins and outs of that for me - Sorry!
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« Reply #46 on: May 10, 2019, 10:00:04 am »

Site contains correspondence ...

If you read those letters, it's hard to understand the argument - they don't seem to be talking about the same ITT. But I think it's something like this:

  • TOCs have always had to bear their share of any extra funding of their bit of the rail pension scheme (RPS), when a deficit needed repair.
  • The RPS is an unusual scheme, in that all funding - including deficit repair - and any excess to be repaid is split 60/40 with the employees (via their unions). In most sponsored schemes the company bears the whole liability for adequate funding, which is why the pension deficit/surplus appears in their balance sheet.
  • In a "normal" scheme, the deficit repair payments can be much larger than the contributions based on salaries paid. There isn't any way for such one-off payments to happen in the RPS. I imagine that the employees' side could never come up with a large "bung" to the RPS, and TOCs have come to rely on their maximum contribution being effectively capped by that.
  • What's changed is that the pensions regulator (TPR) is now telling schemes and sponsors to repair deficits faster - in the past this was often done one a 20-year or longer timescale. They want this done to the RPS too, though note that the size of its deficit is not public information.
  • There are discussions still going on involving TPR, RPS trustees, unions, TOCs (via RDG), and maybe DfT, about faster deficit repair than the current rules of RPS allow for. That might imply new rules (though that's a separate argument).
  • So I can only infer that TOCs are being asked to commit to paying whatever comes out of this negotiation, which is (as Stagecoach are saying) not within their control. It wouldn't be a real negotiation if it was, would it? (Though sponsoring companies do, in the end, generally get their way whatever a scheme's trustees say.)
« Last Edit: May 10, 2019, 10:53:28 am by stuving » Logged
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« Reply #47 on: May 10, 2019, 10:52:10 am »

Thanks for doing that stuving, that's great. I hadn't considered a couple of points in there, and it is a lot clearer for me now.

So does that mean bidding for franchises on these terms is like rolling the dice, with operators like Abellio willing to gamble on the outcome of negotiations that could take years, and operators like Stagecoach not willing to risk it?
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« Reply #48 on: May 12, 2019, 08:04:31 pm »

Now Arriva are joining Stagecoach in taking the DfT to court.

From The Guardian

Chris Grayling’s embattled transport ministry faces a second legal challenge over the way the East Midlands rail franchise was awarded, from Arriva Rail, owned by Germany’s state-backed Deutsche Bahn.

Who pays for these legal challenges?

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« Reply #49 on: May 12, 2019, 08:35:19 pm »

Who pays for these legal challenges?

Depends who wins!
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