The Railways Pension Scheme Order 1994

SHORTFALL

14.  If and whenever an actuarial valuation by the Actuary of the Section shows that the value of its liabilities relating to Members as at the date of that valuation (which liabilities for the purposes of the valuation shall include additional benefits granted following the existence of a surplus under Rule 13 (Surplus Assets) exceeds the value of the assets of that Section (excluding any assets retained in the Special Reserve Fund (as described in Rule 13)) 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 transferred out of the Special Reserve Fund to meet this shortfall; and

(b) Members' benefits in payment or 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 the 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 in deferment until such time as they become equal to or less than the Guaranteed Level of Benefits,

whichever occurs first.

(ii) If (cc) occurs first under (i)(b) above, and there still remains a shortfall, then further assets of the Special Reserve Fund shall be applied by the Trustee 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 Trustee shall reduce the value of Members' benefits further 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.

(iii) If there 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.

(iv) For the purposes of this Rule the actuarial valuation shall be the 3 yearly valuation under Clause 6B of the Pension Trust (unless the Secretary of State and the Trustee agree otherwise).

Following the date of a subsequent actuarial valuation the net present value of the existing shortfall and the application of assets and reduction of benefits (if any) described above will be reviewed and new or different terms may be agreed between the Secretary of State and the Trustee.