Strike threat if TfL pensions review not upheld
A review of Transport for London’s pension scheme has found it is well-run, highly valued, and in surplus.
The report comes as the organisation is required to present proposals for reducing operating costs by £400 million a year, while also moving its pension fund into “a financially sustainable position”.
A pension review was a condition placed on TfL by the Government, when it agreed almost £5 billion worth of shortterm financial support during the pandemic. It presents four options for the future of the scheme but avoids making specific recommendations.
One option is to maintain the existing final salary pension scheme with no changes. Another is to modify some elements of the current scheme. The two other options involve replacing it with a system based on career average earnings. Savings for TfL could potentially reach up to £182m a year.
Final salary pension schemes have largely disappeared in the private sector. But the review makes clear that the pension is the only valuable benefit most employees receive apart from their pay and travel concessions.
The review was led by Sir Brendan Barber, former TUC general secretary and former chairman of the conciliation service ACAS, and TfL board member.
TfL employs 28,000 people and has a turnover of £10bn a year.
A TfL spokesman said: “The report rightly highlights the complexity of the issues related to pension reform, and TfL will now take time to consider next steps. There are currently no proposals for changes to TfL’s pension arrangements.”
The RMT union held two strike days in early March, opposing cuts to pay, pensions or conditions. The strikes largely halted London Underground services.
The TSSA, which claims to be the largest union in TfL, said the review showed there was no need to change the scheme, calling it
“politically motivated from a Tory Government seeking to punish Londoners and drive a wedge between the Labour London Mayor and TfL’s workforce”.
General Secretary Manuel Cortes added: “The independent review has shown what we knew all along - that TfL’s pension fund is viable and there is no need to slash workers’ pensions.
“This Government was happy to bail out private train operators and their shareholders when the pandemic hit, but at every opportunity they have shackled TfL with strings and conditions.”
The union said that any attempt to make workers pay more for less was a red line that would lead to strike action.
ASLEF London Underground
organiser Finn Brennan said: “The report demonstrates that the fund is healthy and well-managed. It is now in surplus, which means that there will be a substantial reduction in costs of up to £70m for TfL this year.
“The report makes clear that if changes were to be made to the scheme, they could have a huge impact on the income staff receive in retirement that would be neither fair nor sustainable.
“If TfL or the Government try to force through detrimental changes, the result will be sustained and hard-hitting industrial action.”
The Government has recognised that in the context of rising inflation and post-pandemic passenger numbers, TfL has a challenge in simply standing still on costs. The £400m of savings would come on top of that.
TfL is required to achieve financial sustainability by April 2023. Its existing funding deal with Government expires in June.
Sir Brendan Barber’s report states that changes could take years to be fully implemented, especially if primary legislation is required.
He wrote: “These combined pressures from a significant loss of farepayer revenues, and challenges from central Government, will inevitably confront TfL with very tough choices.
“Added to this mix is the wider economic backdrop, which now sees significant pressures on the cost of living, and inflation at its highest level for decades.”