Tube workers strike as TfL pensions dispute rumbles on
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Tube staff in the RMT union have walked out on Thursday over a potential 30% cut in pensions, saying London Underground should "make a clear statement that they would not agree to detrimental attacks on Tube workers' pensions”.
The RMT wants London Underground to commit to not attacking the TfL pension scheme. “London Underground has consistently refused to do this, including just this week," it said.
In exchange for a 21-month funding agreement reached in late August, London’s public transport operator had to produce two options for future service reform with the aim of reducing future service benefits by circa £100m a year. To fulfil the savings target of £100m, pensions would be around 30% lower, the RMT argued.
The transport union accused the mayor and TfL of creating “pathways for the government to make detrimental changes to our members’ pensions” despite not agreeing with the Department for Transport that such cuts were necessary.
Union Unite, which has about 1,000 members employed at London Underground, is also on strike. Regional officer Simon McCartney said: “There is absolutely no need for TfL to press ahead with these attacks. The pension scheme is financially viable and in credit and the savings TfL were forced to make have already been found elsewhere. It is high time London’s Labour mayor Sadiq Khan intervened.”
Future service benefits cuts to the tune of £100m ‘wholly unacceptable’
In October, TfL complied with the government’s conditions of outlining options for reform of future service benefits, without making any recommendations. It noted in its report that since the £100m savings figure was first suggested, TfL has already made savings of around £70m a year as a result of the triennial valuation, and that the target will reduce in 2030 through the agreed change of the retail price index.
The report stated that "in TfL’s view, the wholly unacceptable detrimental impact on members’ benefits of seeking to achieve government’s cost saving target of £100m for future service alone, is not a fair or reasonable balance” of affordability, sustainability and fairness.
It said instead the main risk is in past service benefits, and suggested that this would require either:
government support for legislation to enable a transfer of past service assets and liabilities to a new or existing funded or unfunded public sector arrangement in order to reclassify the Scheme as a public sector scheme; or
government provision of a crown guarantee similar to that enjoyed by BT.
A TfL spokesperson said: “Securing a workable funding agreement with the government was absolutely essential to the future of London's transport network and everyone who works at TfL. This recent submission to the government meets a requirement of the funding agreement. In developing these options, we have been clear that if any change has to be progressed then this would require appropriate consultation and further work before any decisions can be made. There are no changes to pensions as a result of this submission and no proposals for change.”
TfL is due to agree a final detailed proposal by 31 January 2023 with the mayor and government.
The open final salary scheme of TfL falls into the remit of the London mayor, a position currently held by Labour’s Sadiq Khan, and has been a thorn in the side of the Conservative central government ever since. A previous funding agreement demanded an independent review of the scheme, which in April this year said it was “well run and highly valued”. The £13bn scheme had a small surplus as at March 2021.
TfL is funded mainly through fares and grants. The Department for Transport provided support following a slump in passenger numbers during the Covid-19 pandemic.
TSSA, the largest union in TfL, has previously blamed former London mayor Boris Johnson for TfL’s current funding troubles, who agreed to a deal slashing government funding by £700m per year. TSSA said in August that this has made London the only major city in the world not to receive public funding to cover running costs.
Should TfL be required to meet the £100m savings target?