Written question asked by Mike Hancock (Liberal Democrat) on Monday, 17 October 2005, in the House of Commons. It was due for an answer on Wednesday, 19 October 2005. It was answered by Derek Twigg (Labour) on Tuesday, 25 October 2005 on behalf of the Department for Transport.

Railways

Question: To ask the Secretary of State for Transport who is responsible for the pension deficit on South West Trains; what would happen to the pension liabilities in the event that a new franchisee was chosen; and if he will make a statement.

Answer: Most employees of South West Trains are members of the South West Trains Shared Cost Section of the Railways Pension Scheme. South West Trains, as franchise holder, is responsible for managing the terms and conditions of service of its staff, including pension arrangements, in accordance with general Employment Legislation and the specific legislation relating to Railway pensions.In the event of a shortfall in this Section, the rules of the Scheme allow the employer and trustee six months after the valuation is signed to agree arrangements to make good the shortfall. The valuation as at 31 December 2004 is expected to be finalised by 31 December 2005 and so the six months will expire on 30 June 2006. If no agreement is reached within the six months there are default provisions in the rules that basically would increase both the members and employer's contributions.On a change of franchisee, it is expected that the new franchisee will become the Designated Employer for the Section and assume all employer contributions for the Section.

Secondary information