The Railways Pension Scheme Order 1994

Use of Assets on Termination

16B  If any assets remain (excluding the assets retained in the “Special Reserve Fund” (as described in Rule 13 (Surplus Assets))) an amount equal to (or if less, up to) the accumulated value of the payments (if any) made under the Secretary of State’s Guarantee, but not previously transferred to the Special Reserve Fund under Rule 13, shall be transferred to that Special Reserve Fund. If any assets of the Section remain after this transfer, 40% of those assets shall be used by the Trustee (having considered actuarial advice) to provide additional benefits above the Guaranteed Level of Benefits for all or any of the beneficiaries on a basis agreed with the Pensions Committee and consistent with Revenue Approval. An amount equal to one and a half times the value of these additional benefits shall be transferred to the Special Reserve Fund.

On winding–up the Section under Clause 11 of the Pension Trust (Winding–up a Section where all Participating Employers Cease to Participate) when the assets of the Section (excluding the Special Reserve Fund) are not sufficient to provide benefits equal in value to the entitlements under the Section of the Members and other beneficiaries concerned, then together:

(i) (a) the assets of the Special Reserve Fund having a net present value of up to 60% of the shortfall shall be applied to meet this shortfall; and

(b) Members' benefits in payment or in deferment shall not be increased until either (i) the completion of such period as is necessary to provide an amount equal in value to 40% of the shortfall or (ii) the Guaranteed Level of Benefits equals or exceeds Members' benefits in payment or in deferment, whichever occurs first,

until such time as either:

(aa) no shortfall remains; or

(bb) all the assets of the Special Reserve Fund have been applied fully; or

(cc) Members' benefits have been reduced in value by not increasing benefits in payment or deferment until such time as they become equal to or less than the Guaranteed Level of Benefits,

whichever occurs first.

(ii) If (cc) above occurs first under (i)(b) and there still remains a shortfall, then further assets of the Special Reserve Fund shall be applied having a net present value up to the remaining shortfall until either no shortfall remains or all the assets of the Special Reserve Fund have been so applied, whichever occurs first. If however all the assets of the Special Reserve Fund have been applied under (i)(a) above first, and there still remains a shortfall, then the value of Members' benefits shall be further reduced by not increasing benefits in payment or in deferment until such time as they become equal to or less than the Guaranteed Level of Benefits or no shortfall remains, whichever is first.

• If any assets of the Special Reserve Fund remain following winding–up under Rule 16, they shall be applied at the discretion of the Secretary of State;

(iii) if there still remains a shortfall after Members' benefits have been reduced in value by not increasing benefits in payment or in deferment until such time as they become equal to or less than the Guaranteed Level of Benefits and all the assets of the Special Reserve Fund have been fully applied, the terms of the Secretary of State’s Guarantee shall apply.