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Privatisation

Volume 79: debated on Friday 17 May 1985

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asked the Chancellor of the Exchequer what has been the cost to public funds, and what extra cost is anticipated, in relation to the pension rights of employees and former employees of (a) the National Freight Corporation, (b) Sealink and (c) industrial training boards.

asked the Secretary of State for Transport what has been the gross benefit to public funds of the sale of (a) the National Freight Corporation and (b) Sealink to the private sector: and what was the net benefit after obligations for present and future pensions were taken into consideration.

I am also replying, on behalf of the Secretary of State for Transport, to a similar question tabled to him.Gross proceeds from the sale of the National Freight Corporation were £53·5 million. Deficiencies some £48. ·7 million in the National Freight Corporation pension funds were met from the proceeds of sale. After deduction of sale expenses, net sale proceeds were about £4·6 million. In addition, payments are made from public funds to national Freight Company pension funds to cover that part of their annual outgo attributable to the unfunded element of the National Freight Corporation's obligations to its pension funds incurred before 1 April 1975. These historic support payments, which total about £5 million a year, relate to employees who were transferred from British Rail to the National Freight Corporation in 1968, and are unaffected by the privatisation. Proceeds from the sale of Sealink were retained by British Rail and did not accrue to central Government. Payments are made from public funds to British Rail pension funds to cover that part of their annual outgo attributable to the unfunded element of the board's obligations to its pension funds incurred before 1 January 1975. These historic support payments, of which about £1 million a year relate to Sealink former employees, are unaffected by the privatisation. In addition, a once-for-all payment of some £5 million to £6 million will be required in respect of that part of the pension transfer value of British Rail pension fund members employed by Sealink at the date of privatisation which relates to pre-1975 unfunded obligations.In respect of the industrial training boards the cost of the employer's contributions to the industrial training boards pension funds required under the pension scheme rules, during the period April 1975 to December 1982 when the operating costs of the boards were met from the Exchequer, was £44 million.In 1983 the industrial training boards pension funds were divided into an open fund which covers the employees of those boards which continue in existence; and a closed fund covering existing pensioners and the preserved benefits of former employees. Employers' contributions to the open fund are the responsibility of the boards and are met from income from levies on industry. No employers' contributions are made to the closed fund, but, since the industrial training boards operational funding had been the direct responsibility of the Government, they have given an undertaking that the pension entitlements due from the closed fund will be safeguarded should the fund at its actuarial reviews be shown to be deficient to meet its liabilities. So far this undertaking has not led to any cost on public funds and is not expected to do so in the foreseeable future.