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Details of the scheme: • The CARE scheme is a shared cost defined benefit scheme, with 60%of the cost met by the employer and 40% by employees • Employee pension contributions are expected to be around 6% of basic pay. (The defined contribution scheme is between 0 and 4%, while the final salary scheme is currently 10.8% of pensionable pay, rising to 11.36% from January 2009 • The CARE scheme offers life assurance of 4x pensionable pay and dependants pensions on death in service, together with ill-health retirement benefits • Benefits will be based on 1.25% of basic pay for each year in the scheme • An employee paying into the scheme over a 40 year career could achieve a pension of 50% of their average basic salary from the age of 65 • The CARE scheme will be open to new employees from day one. Existing employees will have the option to switch to the CARE scheme Summary of a defined contribution scheme: • Employees and employer pay into a scheme • The money is invested, and the investments used to provide an income (usually by purchasing an annuity) when the employee retires • The employee takes all the risk, as the amount available depends on how much is invested, charges, the long term performance of investments and the cost of providing an income (usually by buying an annuity from an insurance company) at the time of retirement Summary of a defined benefit scheme: • Employers and (usually) employees pay into the scheme • Benefits are known in advance, usually being based on a proportion of pay for each year in the scheme • Defined benefit schemes therefore provide more certainty, but the cost cannot be guaranteed in advance Railway Pensions Commission: The results of the 2004 valuation of the Railway Pension Scheme created real concerns across the rail industry that costs were too high and becoming unsustainable. All parties (employers and trade unions) agreed that something had to be done and as a result the Railway Pensions Commission was set up jointly in September 2006. The Commission's remit was to consider, against a background of rising costs of pension provision, what, if any, alternative means of long term pension provision might be available that would be fair and affordable for both employees and employers. The Commission has published its report on its website (http://www.railwaypensionscommission.org.uk/).