§ Mr. Arthur Jonesasked the Secretary of State for Transport if he will give details of the arrangements with British Railways to enable the industry's pensions to be funded; and what is the estimated cost to the Exchequer of the proposed Government grant.
§ Mr. William RodgersSection 5 of the Railways Act 1974 provides for the Railways Board to fund those inherited pension obligations to which the Board was committed at 1st January 1975 and for the cost to be reimbursed by the Secretary of State. Orders made under the Section provide for funding by eight annual instalments commencing on 1st April 1979. Meanwhile the Board on 1st January 1975 assumed a debt to its pension funds interest on which would be sufficient to meet the estimated difference between the relevant costs and income of these funds in 1975. Pending completion of a full actuarial valuation in 1979 this debt may, subject to parliamentary approval, be adjusted annually to meet by way of interest the corresponding requirements of each ensuing year. The total cost in capital and interest from 1975 to 1986 was in 1974 estimated to be some £700 million in prices then current.
Under an Order pursuant to Section 74 of the Transport Act 1962 the Board is also required to repay, by five instalments commencing on 2nd January 1974, a total of £173 million previously deposited with it by its pension funds. Section 7 of the Railways Act 1974 provides for the Secretary of State to reimburse the Board for expenditure incurred from 1st January 1975 in repaying, and paying interest on, the four instalments then outstanding. The cost of reimbursement is estimated at some £165 million.