Commenting on today’s Independent Review into Transport for London (TfL)’s pension scheme, TfL union TSSA says ‘no change’ option vindicates workforce and exposes government’s “politically motivated” review.
The Review was set up as a government requirement as part of short-term funding for TfL during the coronavirus pandemic. TSSA has called the review “politically motivated” from a Tory government seeking to punish Londoners and drive a wedge between the Labour London Mayor and TfL’s workforce in the run up to local elections.
Sir Brendan Barber led the Review team and came up with four options, which crucially includes maintaining the current Final Salary scheme with no changes. The report calls the current scheme “well run and highly valued.” TSSA is the biggest union in TfL and has warned that any changes which force members to pay more for less would be met with strong opposition, including strike action. The pension fund currently looks to be in surplus.
Manuel Cortes, TSSA General Secretary, said: “Today’s 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 is a vindication for TfL workers.
“This review has taken over six months at taxpayers’ expense and all for a politically motivated agenda aimed at punishing London. This Tory 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 to get funding to keep vital transport services running. Trying to slash workers’ pensions is a low blow.
“We’re absolutely clear – any move to get rid of TfL’s pension scheme, any ask for workers’ to pay more for less, is a red line and we will ballot for strike action.”
The Review has put forwards four options for the TfL Board to consider. All except the current arrangements would require pension fund members to pay more and receive less, with some options this would be significantly less. The options are:
· maintain the existing Final Salary scheme;
· modify elements of the current scheme;
· replace it for future service with a CARE (Career Average Revalued Earnings) arrangement
· introduce a CARE option but with tiered contributions
In the ‘Concluding Reflections,’ the Report notes: “As outlined in the foreword to this report, we have not seen it as appropriate to make detailed recommendations on a route forward. TfL, as the sponsoring employer, has the responsibility to decide whether to maintain the current well run and highly valued scheme or whether concerns about longer term volatility, affordability and sustainability, alongside the undoubted immediate financial pressures, require them to propose to the other key stakeholders, amendments to the existing arrangements.”
Only and most valuable benefit: The Review acknowledges that for most TfL and London Underground (LUL) employees, apart from their pay, the only other valuable benefit they get is from their current pension. To change the pension would seriously undermine the benefit structure and make issues of staff retention, already keenly felt in parts of TfL, become even worse.
Pensionable Pay Suppression made worse: TfL staff have already experienced suppression of pensionable pay through the use of Pay for Performance and Senior Manager Reward Frameworks. Done by below inflation pay increases, non-pensionable lump sums or no pay increases at all (often for years), employees on TfL contracts have all experienced pensionable pay suppression meaning that at retirement their pensions could be 20 per cent or more below where they should be when compared to LUL colleagues who have pensionable pay that has kept up with inflation. Detrimental changes to the Pension Fund will only make this situation worse and potentially extend it to LUL members.
2021 Valuation: The Review has taken place at the same time as the 2021 Valuation which recently reported its draft findings of a modest surplus, provoking questions about why change the scheme when TfL will be saving £60-70m per annum? The Review has found that the Trustees have managed the current scheme very well.
How easy is change? The Review acknowledges that should TfL decide to take one of the options forward, it may take years to be fully implemented, especially if primary legislation is required. This may mean that TfL looks to implement short term measures in order to save money, especially as it is under pressure from the Government to achieve financial sustainability by April 2023. Speculation about whether the Government is able to amend existing legislation may be the recourse that is taken but would be met with determined opposition.
Opposition to detrimental change: TSSA has been very vocal in opposing any detrimental change to the pension scheme in TfL/LUL. 96% of TSSA members see the long-term future of the Scheme in its current form as either extremely important or very important to them. TSSA will oppose any change to the Pension Fund and has been preparing to launch industrial action.