TfL Pension Review Background
Background
Transport for London embarked on a review of its Pension Fund in 2021. This was a demand placed upon it by the UK Government as a condition for the financial support it received on 1 June 2021. The Government’s demand was that the review should identify and make recommendations about ‘reform’ options, with the explicit aim of “moving TfL's pension arrangements into a financially sustainable position whilst protecting members' benefits built up to date.” TSSA is opposed to any changes that would be detrimental to our members’ pensions and we made that position clear through the review.
The first hint of a potential review was contained in TfL’s Independent Review (published in December 2020) that claimed savings of £100m could be made by changing the scheme. The idea of the review was accepted as a matter to discuss with the Department for Transport (DfT) in TfL’s Financial Sustainability Plan (published January 2021) and became a condition for the support package.
Subsequently, an Independent Review was established, headed by Sir Brendan Barber. The Independent Review established a Contact Group with a representative from each of the trade unions recognised by TfL and London Underground (LU). One of the Review’s first actions was to produce its first Call for Evidence, inviting responses from various stakeholders including the trade unions, the Fund’s Trustee, Pensions Working Group and others.
The Barber Review reported in March 2022. You can read about that here.
The Fund is highly regarded by its members with virtually all of TfL and London Underground employees contributing, along with TfL and LU as employers.
The reason that we can say the Fund is highly valued is because in preparation for TSSA’s response to the first call for evidence we ran a survey of members which had a large participation with overwhelming support for the scheme as it is currently set up. More details can be found in our submission, on the documents and resources section. This outcome, along with the clear message that we have heard from members at numerous meetings is that they are opposed to making changes to the scheme that would mean they have to pay more and see their pension benefits cut.
The Fund’s 2018 valuation revealed a deficit meaning that TfL had to pick up the deficit repair contributions. At the same time as the Review was announced, the Trustee had started on the work required from the 2021 valuation.
The results of the latest valuation (the 31st March 2021 Valuation) of the TfL Pension Fund were not finalised until the end of March 2022 and have revealed a £179m surplus. This has meant TfL (including LU) now pays £70m a year less in contributions. It also means that the basis of the demand for £100m savings has now changed because it was based on figures from the deficit situation that existed after the 2018 valuation.
Following the Barber Review, an ‘Options Paper’ was produced, containing three options emanating from the Barber Review team’s work. Read more about the Options Paper and TSSA’s response here.
TSSA is opposed to increases to members’ contributions or any reduction in pension benefits and this is our consistent message in our work on this matter.