On Friday October 14th, Transport for London published a paper on its' approach to reform of the Pension Fund, as it was required to under the funding agreement with the government.
This paper largely repeated points made often before; that the Fund is in financial surplus, that any change would be complex and take a long a time to make, and would need government legislation.
TfL also reiterated that the government’s target cost saving of £100 million is based on out-of-date information and that to try to make savings at that level would lead to an “unacceptable level of detriment to members benefits”.
It is good that TfL have openly recognised that the government saving targets are not realistic. But the funding agreement still means that they must propose changes and agree them with the government.
Any changes to members current benefits could only be made if voted on and agreed at a general members meeting. In practice this is very unlikely to happen as members would probably not vote to cut their own future incomes!
So the most likely route for change is legislation by the government that overrides the current scheme rules. But given the current chaotic nature of the central government, it is impossible to predict if and when they would bring forward proposals (or if they will even be in office in three months’ time).
One suggestion made in the paper is that the assets and liabilities of the fund could be transferred to the government in return for a promise that they would cover the costs of future pension entitlements. But this would remove all the protection that the current fund rules gives to members benefits.
The money in the pension scheme does not belong to TfL or to the government. It belongs to the pensioners, deferred pensioners and current contributing members and is held in trust for them to provide for their futures. The trustee board is made up of nominees of members, including trade unions, and the employer. The trustees have a duty to protect the fund and ensure that members expected benefits are paid. They would have no legal or moral right to hand that money over to the government or anyone else.
The only justification put forward for changes is that natural volatility in financial markets could mean that at a future valuation, the fund could show a deficit. But volatility is an inherent part of any long-term investment. Public transport (and the London Underground) will be around for many, many decades to come (untill Star Trek style teleporters are invented!) The focus should be on securing long term benefits for pension fund members, not on short term market movements.
The next stage will be for the government to explain what approach it will take and how it will respond to Tfl’s paper. The funding agreement says that this has to be done by the end of January 2023. If they come forward with a proposal, there would then have to be negotiations and consultation with members. This would be a long drawn-out process and, as the TfL paper acknowledges, hard hitting industrial action would be the inevitable result of any attack on members benefits.
ASLEF’s position is unchanged. We do not believe there is any justification for changes to the fund and we will oppose any detrimental changes politically, legally, and industrially.
Even what seem like small changes now can have a huge impact on the income you receive when you retire. This is especially true for younger members who may have decades of service ahead of them. That is why we are determined to do everything we can to protect our members future incomes.
We will update members on any developments, but in the mean time, I want to remind everyone of the importance of making sure that the union has your up to date address and contact information so that we are in a position to act with strength and unity when we need to do so.
Best regards,
Finn Brennan
ASLEF District Organiser.
