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Thursday, December 1, 2022

Why the pension scheme for London Underground staff has led to a strike

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Passengers have been warned that many stations will be closed next Tuesday and Thursday – and to expect services to be “severely disrupted” on the morning following each of the strike days.

The strike, announced on Thursday morning, is in protest at what the unions regard to be a threat to jobs and pensions.

Compared with the private sector and other parts of the public sector, the Transport for London pension scheme is generous.

Members contribute up to five per cent of their salary – while TfL contributes 6.66 times this amount, a sum equal to 33 per cent of their pay packet.

It is a “final salary” scheme – unlike those used for Metropolitan police officers, London firefighters and Greater London Authority staff.

The threat to pensions is one of two issues at the heart of the next week’s Tube strikes. The other is the axing of 500 to 600 station posts.

Are TfL pensions actually under threat?

Probably. Under the terms of the Government’s covid bail-out last June, TfL was required to review its pension scheme and identify options to put it in a “financially sustainable position”. The RMT fears the ratio of employee to employer contribution could fall from more than 1:6 to 1:2.5 as TfL looks to save millions, and potentially as much as £730m by 2024/25 if the Government gets its way.

When is this to happen?

Former trade union boss Sir Brendan Barber was asked by Sadiq Khan to review the pension fund and filed an interim report request last December. He is “on course” to send his final report to the Government by March 31, according to the mayor’s chief of staff David Bellamy.

Sir Brendan’s interim report won some support from some Tube unions. The TSSA welcomed its finding that the pension scheme was “the only benefit of substance on offer to TfL employees” and the recognition that “the overall benefits package at TfL tracks below the market median for a number of key roles”.

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