From RMT General Secretary Bob Crow

As you will be aware the dispute with Tube Lines management regarding pension and travel equality will be reaching a significant stage over the Christmas period as a result of possible further industrial action. It is therefore important that members are fully aware of the issues involved so that they can make an informed decision when supporting this action.

It has been requested by RMT representatives that on the issue of pensions, comparisons are given to members outlining what the differences are, in monetary terms, between the Transport for London Pension Fund (TFLPF) and the Tube Lines Pension Scheme (TLPS).

While it is difficult to make a direct comparison between the TFLPF and the TLPS the basic principles of the two arrangements are:

• The level of pension in the TFLPF is based on a member’s service and salary in the final year of their membership in the scheme, known as final salary or Defined Benefit (DB)
• The level of pension in the TLPS is dependent on the amount of contributions made into an individual’s ‘pension pot’ and how well the money is invested. The level of pension at retirement is also reliant on the annuity rates being offered at the time of the member wishing to retire, these rates can go up or down. The TLPS is a Money Purchase arrangement or Defined Contribution (DC)
• The TFLPF offers members a promise that at retirement they will receive a certain level of pension at retirement
• The TLPS offers no such promise, and while a pension will be payable at retirement it is difficult to calculate exactly what that pension will be as a result of the volatility of investments and fluctuating annuity rates

Benefits
Based on the above it is almost certain that the level of benefits being offered by the TFLPF will be far greater than that being offered by Tube Lines. DC pension schemes are not comparable in regards to the security and level of pension a DB member an individual can expect to receive at retirement. As stated above one offers a promise and one does not.

It is nearly impossible to give clear calculations on the expected level of DC members’ pensions at retirement.

While the RMT are not attempting to give Independent Financial Advice it is important that members are aware of what benefits they could expect to receive at retirement.

Below are number of comparisons which illustrate the possible different levels of retirement pensions beings offered by the TFLPF and a comparable DC arrangement similar to the TLPS. Please note DC examples have been calculated using the Money Advice Service Website.

Example 1

Example 2

Example 3

1. All examples are based on a retirement age of 65
2. DC examples illustrate member contributions although maximum employer contributions (10%) have been included in the calculation
3. All contributions exclude tax relief
4. Note monthly retirement pension is taxable
5. All examples exclude possible tax free lump sum benefit
6. DC examples are based on a member choosing to have inflation protection on their pension and dependant benefits in retirement
7. DC Source: https://www.moneyadviceservice.org.uk/en/tools/pension-calculator

Unfair
While it is important to note that the DC illustrations above can go up or down depending, on investment returns, it would be fair to assume that ‘pound for pound’ the TLPS or any other DC arrangement is extremely unlikely to offer the level of benefits being offered by the TFLPF. The TLPS would certainly not offer the promise of a certain amount of pension at retirement.

As I have already expressed it is important that members are aware of what is at stake in this dispute and the above illustrates hit this very point. While no one enjoys taking industrial action and losing money, Tube Lines employees deserve the right to join the TFLPF.

I will be writing to you again soon but in the meantime I ask you to support your claim for equality and support any necessary industrial action called.

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