Transport for London Pension Fund

From Bob Crow, General Secretary ...

Dear Colleague,

I am writing to bring you up to date with developments in regard to the TfL Pension Fund.

Actuarial Valuation

The results of the latest valuation of the Fund have recently been concluded. The valuation, as at 31st March 2009, assesses whether or not there are sufficient assets to pay for pensions already promised to existing pensioners, deferred pensioners and active members, and also sets employer contribution rates necessary to fund future benefits after the valuation date.

The valuation revealed a £1,206m deficit in the Public Sector Section. In addition a deficit of £125m exists in the LUL BCV and SSL sections, and a £75.6m deficit in the Tube Lines Section.

The Trustees have agreed a deficit recovery program which will see the employer rectify the shortfall over a period of ten years. These additional payments will be a combination of higher employer contributions followed by lump sums made on or before 31st March 2018 and 31st March 2020. Obviously the necessity for the deficit contributions and lump sums will be reviewed at at triennial valuation. Employee contributions and all current benefits remain unaffected by these arrangements.

TubeLines

RMT continues to argue that as a result of Tube Lines being taken back into the TfL fold, all Tubelines employees should be allowed entry to the TfL Pension Fund. Management is resisting this call on the spurious basis that Tube Lines is a subsidiary of LUL. This is of course totally preposterous and a disingenuous cost saving ploy designed to avoid offering employees recruited since April 2003 the opportunity to accrue final salary benefits. Management is making significant savings by insisting that Tube Lines employees continue in the Money Purchase scheme rather than the TfL Pension Fund. Not only are such employees unable to obtain salary related pensions but they also do not have access to the added benefits, such as ill-health or dependant pensions, which are part and parcel of final salary schemes.

Two-tier employment status is totally unacceptable and RMT will continue to press for an end to Tube Lines employees after 2003 being treated as second class for pension purposes.

Attack on Public Sector Pensions

Members will have noticed the unprecedented verbal attacks by the ConDem Government on public sector pensions. There has been no specific mention of the TfL Pension Scheme but members should be in no doubt that if Government is successful in changing those pensions, then there is every likelihood that similar changes will be sought for the TfLPF.

Not content to attack public sector pensions, the ConDems have also stated an intention to pass legislation which would mean all pensions being up-rated in line with CPI instead of RPI. This is nothing short of a raid on final salary schemes as CPI does not accurately reflect inflation in the economy and therefore is historically lower than RPI. Future pension increases for those drawing pensions and deferred pensioners, will therefore be lower than previously anticipated.

The ConDem Government would have to introduce primary legislation overriding scheme rules such as the TfLPF’s which specifically refer to indexation at RPI rather CPI or increases prescribed by the annual Pension Increases Orders. Currently TfLPF pre April 1989 active employees and pensioners are entitled to index-linking at full RPI, and post April 1989 employees and pensioners RPI capped at 5%.

However, I would assure members that RMT will seek to protect the TfL Fund and to ensure that its benefits may be enjoyed by past, existing and future LT employees. I shall keep you advised of developments.

Yours sincerely,

Bob Crow, General Secretary