This morning the TfL trade unions met with senior management at the Pensions Working Group for a briefing on the plans for a review of the pension fund. Having a review is a condition of the funding agreement that the Government has imposed on TfL.
Our pension fund is well run and very healthy. A balanced investment strategy means that it has managed to grow significantly even during the pandemic and volatility in financial markets. But despite this the Government is insisting on a review and a report proposing possible changes.
The TfL fund is a defined benefit final salary scheme. That means that your pension is based on how many years you serve and your salary when you leave. You can see exactly how the calculation is made here.
Members of the scheme pay 5% of salary in pension contributions. The rest of the cost is made up from investment income and by contributions from the employer, TfL. Your pension is guaranteed; it isn’t dependent on the ups and downs of the financial markets. If investment returns are poor, then the employer has to make up the difference.
The purpose of the review is to reduce the costs of the pension fund to TfL. The aim is to find a way of reducing the amount spent on staff costs by having to put aside less now to pay for future pensions. There is still no plan or proposals for how this could be done.
This morning we were told that there was still no update to how the review would be carried out or what its scope will be. But however it is to be done, the issue is what its remit will be. In short, how much is TfL trying to cut its contribution to the pension fund by? And what would the impact on your benefits and your income when you retire be ?
Keeping a final salary, defined benefit pension scheme is a key aim for ASLEF. It means that members know they will have a decent income in retirement (and anyone who has spend decades ploughing up and down the Northern or going east to west or round in Circles, more than deserves a bloody good retirement!). The current pension scheme is an excellent one and we will fight to defend it.
It is important to say that there is strong legal protection of the benefits you have already earned in the pension fund. Management have said that any changes would affect future years only. But even seemingly small changes can mean a big impact on the total income you receive in retirement. Big changes, like a move to a defined contribution scheme, where your pension income is dependent on financial markets instead of linked to your salary, would mean a huge drop in your expected living standard in retirement.
Your pension is wages that you earn now but is paid to you when you retire. A cut in pension benefits is in reality, a cut in wages.
We don’t know what the outcome of the review will be or even how it will be done. A report setting out options is due to be produced in October. ASLEF will engage with the review to make sure that our members interests are defended. We want to make sure that our members know what an important issue this is. We are going to have to be prepared to fight to make sure that whether you are retiring in two years or twenty years’ time, you have the pension you deserve.
As soon as we get any more information on how the review will be conducted we will report to members.
Finn Brennan
ASLEF District Organiser
