Unfunded pensions for TfL employees

Meeting: 
MQT on 2015-06-17
Session date: 
June 17, 2015
Reference: 
2015/1648
Question By: 
Caroline Pidgeon
Organisation: 
Liberal Democrats
Asked Of: 
The Mayor
Category: 

Question

The papers for the Remuneration Committee of the Board of Transport for London, held on the 3rd June 2015, state that out of 21 senior managers (including Directors and Chief Officers) the Commissioner has approved 12 for the provision of unfunded pension benefits.   Please state: (1) the estimated annual cost for the implementation of this policy, and (2) how many further TfL employees currently benefit from unfunded pension benefits.

Answer

Answer for Unfunded pensions for TfL employees

Answer for Unfunded pensions for TfL employees

Answered By: 
The Mayor

Unfunded pension payments are made to some employees on retirement in respect of service prior to the establishment of pension funds for those employees. Supplementary payments are also made to some employees who retired prior to the index linking of pensions.

The provision of unfunded benefits has now also been offered to 12 individuals. The theoretical cost to TfL of taking the 12 individuals out of their existing Pension Fund and providing them unfunded pension benefits is currently around £30,000 per person, per annum. This is a notional figure derived from making certain assumptions. The actual cost will be determined by the final benefit payable at the time it is calculated.

In addition to the 12 referred to in the Remuneration Committee paper of 3 June, the Commissioner has been in receipt of an unfunded promise for some time arising from his employment terms from 2001, and two other individuals have also been offered this opportunity.

These are staff for whom wider changes in pensions legislation would mean a significant worsening in benefits if they were to continue to stay with TfL. As per the criteria agreed with the Remuneration Committee, and delegated to the Commissioner, the decision on whether to offer such payments is contingent on the following:

- the criticality of the individual to the business; or

- retention of the individual, where if they left this would or could cause immediate and significant risk to high profile projects or operations of the business; and

- in every case, only where impacted by the Lifetime Allowance.