TfL Pensions Review is over, says London mayor
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The TfL Pensions Review has been put to bed, with all conditions met, London’s transport commissioner and the mayor of London have told the trustees and government.
In their letters from late last year, Andy Lord and Sir Sadiq Khan said no changes are being made to the TfL Pension Fund, adding that TfL is not involved in any discussions around the Mansion House reforms of the Local Government Pension Scheme. The Department for Transport is aware of the mayor’s letter and is considering this.
The latest triennial valuation of the TfL scheme was agreed last month after “extensive negotiations” with TfL about the assumptions being used.
The trustees and employer have now decided “there should be an element of derisking” of the investments to reduce volatility, despite the scheme being open to new members. The trustees also agreed to an abatement of employer contributions to the minimum allowed under the rules. After derisking and reduced employer contributions, the scheme still has a £2.5bn surplus, which it will retain as a buffer in case of future falls in the funding level, the trustees noted.
Lord wrote in late November that the significantly improved funding position, reduced volatility and lower contributions meant the main drivers of the Conservative governments’ review of the scheme have changed and confirmed that “no conditions related to pensions have been included in our recent capital funding settlement”.
The Pensions Review had been a condition for a funding settlement for the capital’s transport provider.
However, he added: “Whilst we believe that the original pension condition has been met, and have expressed this view to [the government], we are yet to formally receive confirmation from [the government].”
In mid-December, Sir Sadiq then told the trustees that “TfL has disbanded the pension review team”, with the chief pension review officer, Tricia Wright, leaving TfL at the end of 2024.
“My view is that we have now met the original pension condition and as a result I consider the pension review process at an end,” he wrote, with “no plans... to change the pension scheme”.
The TfL pensions review had proposed four options for the scheme, including ‘do nothing’, an amended final salary scheme, a career average revalued earnings scheme, and a CARE scheme with tiered contributions.
Neither Sir Sadiq nor Lord said how much was spent on the TfL Pensions Review.
TfL and the TfL trustees have been contacted for comment.
In their letters from late last year, Andy Lord and Sir Sadiq Khan said no changes are being made to the TfL Pension Fund, adding that TfL is not involved in any discussions around the Mansion House reforms of the Local Government Pension Scheme. The Department for Transport is aware of the mayor’s letter and is considering this.
The latest triennial valuation of the TfL scheme was agreed last month after “extensive negotiations” with TfL about the assumptions being used.
The trustees and employer have now decided “there should be an element of derisking” of the investments to reduce volatility, despite the scheme being open to new members. The trustees also agreed to an abatement of employer contributions to the minimum allowed under the rules. After derisking and reduced employer contributions, the scheme still has a £2.5bn surplus, which it will retain as a buffer in case of future falls in the funding level, the trustees noted.
Lord wrote in late November that the significantly improved funding position, reduced volatility and lower contributions meant the main drivers of the Conservative governments’ review of the scheme have changed and confirmed that “no conditions related to pensions have been included in our recent capital funding settlement”.
The Pensions Review had been a condition for a funding settlement for the capital’s transport provider.
However, he added: “Whilst we believe that the original pension condition has been met, and have expressed this view to [the government], we are yet to formally receive confirmation from [the government].”
In mid-December, Sir Sadiq then told the trustees that “TfL has disbanded the pension review team”, with the chief pension review officer, Tricia Wright, leaving TfL at the end of 2024.
“My view is that we have now met the original pension condition and as a result I consider the pension review process at an end,” he wrote, with “no plans... to change the pension scheme”.
The TfL pensions review had proposed four options for the scheme, including ‘do nothing’, an amended final salary scheme, a career average revalued earnings scheme, and a CARE scheme with tiered contributions.
Neither Sir Sadiq nor Lord said how much was spent on the TfL Pensions Review.
TfL and the TfL trustees have been contacted for comment.
