Finn Brennan ASLEF Distri
There is no reason to change the TfL pension scheme.
Yesterday, Tuesday Sept 27th, TfL gave its response to the Independent Pension review as required by the Funding Agreement with the Government. The response largely echoes points made in the review itself. As we have often pointed out before, the existing Pension Fund is well managed and in surplus at its' last valuation. It is very highly valued by staff and provides the only major benefit staff receive. Any changes to the existing scheme would take years to implement and would risk creating big additional costs for TfL rather than saving money.
If TfL wanted to wind the scheme up or close it to new entrants, then they would have to make huge additional payments as the scheme would effectively have an “end date” by which time all its’ liabilities would have to paid. This would mean that the Trustees would have to change the investment strategy to reduce risk and would need more money upfront from TfL. This is not a practical option.
TfL also challenged the Government’s target of making a £100 million per annum saving from its contribution to the scheme. It pointed out that this figure is out of date as it doesn’t take into account the £70 million that has already been saved as the scheme is now in surplus. This means that TfL contribution has already been reduced from around £400 million to £330 million.
TfL accept that further reduction in employers’ contributions of this size “would result in a significant and unacceptable impact on members benefits” and would make it much harder to recruit and retain staff as well as leading to industrial action that would damage the business. This is a point that ASLEF and other trade unions have repeatedly made.
They recognise that as well as having to protect benefits people have built up so far, the rules of the Fund mean that changes to benefits for the future could only happen if they were agreed by members at a general meeting. In practice it is impossible to imagine that staff would turn up at a meeting and agree to cut their own future income.
The TfL Pension Fund provides a “defined benefit” pension. That means you can see exactly what you will get when you retire, and any risks from changes in financial markets are taken by the employer. Although TfL is effectively a public sector employer, the Pension Fund is regulated like that of a private sector company. That creates addition costs and also means that TFL caries the risk of increased contributions in the future if investment returns are poor.
To avoid this, TfL suggests that the fund could be treated as a public sector one. This would need government legislation. Although it would save the employer money it could create big risks for staff. The current Pension Fund rules have very strong protection for members benefits and it is overseen by a Trustee board made up of representatives of members, including Trade Unions as well as management. There is no guarantee that a government run scheme would give members the same level of protection. This government has often shown that it is prepared to change the rules and ignore the law when it suits it. Trusting them with your pension fund would not be a sensible move!
There is no real reason to change the existing pension scheme. Big savings in the employers’ contributions have already been made. And the extra saving they want are dwarfed by the vast handouts the government gave to the wealthy in last weeks “mini budget”
Your pension is money you earn now that you get when you retire. A cut in pension benefit is a cut in wages. ASLEF will oppose any detrimental changes to the current scheme industrially, politically, and legally and work with the other trade unions where practical to make sure we protect not just what people have already earned, but also the right to a decent retirement for the future for all our members.
TfL is due to provide a further report to the government in two weeks’ time and we will update members again then.
ASLEF District Organiser.