UK - The UK's combined £17bn (€25bn) railway pension funds made an aggregate return of 16.3% in 2005 - almost double the previous year's 8.3%, company accounts show.

The largest scheme in the system, the £15.9m Railways Pension Scheme (Railpen), returned 18%, according to figures from Railtrust Holdings, the parent of Railways Pension Trustee Co.
Railtrust chairman James Jerram said "almost all of the schemes' pooled funds either outperformed or hit their target benchmark".

Railpen is invested in global equity (60%), global bonds (12%), private equity (8%), UK property (8%) with the remainder in index-linked assets, cash plus and short bonds.
Despite good returns, the retirement scheme is believed to have a deficit of £350m with some unions claiming that it is closer to £500m.

Out of the 99 sections that were created in the scheme since the railway privatisation, almost two thirds are in deficit. This is put down to poor investment conditions and changes to mortality assumptions.
Unions are concerned that members, who cover 40% of RPS, would see their contributions rise as high as 20% to cover for the deficit.

"We felt that members would not pay this and drop out," Nick Cole, pensions officer at RMT transport union, told IPE.

"If people drop out that means that there are fewer active members in the sections and fewer members amongst which to distribute the deficit. We were afraid that this would lead to a spiralling of members dropping out and rising contributions."
They're demanding a 10.5% cap on contributions and a streamlining of the system, creating no more than three sections. To avoid industrial action a commission was proposed which is to look into the scheme's organisation.

Cole hopes to see the commission meeting in early September with the last member on the three-seat board due to be announced by next week.