Dear Colleagues,

TFL PENSION FUND - 2015 TRIENNIAL ACTUARIAL VALUATION

Following the 2015 triennial actuarial valuation of the TfL Pension Fund the results reveal a deficit of £396 million with a funding level of 95%. This is a significant improvement on the previous valuation carried out in 2012 which revealed a deficit of £699 million (funding level of 89%). 

While investments have significantly performed between valuations this gain has been offset by the reduction in other assumptions such as the discount rate. The discount rate is an assumption on how well investments will perform in the future.

In effect the improvement in the funding level is equal to the deficit correction payments made into the fund between 2012 and 2015. I would add that while the deficit has reduced the future service cost (benefits built up in the future) has increased.

Presently the employer makes annual future service contributions of 20.4% and deficit recovery contributions of 10.6% totaling 31%. Under the schedule of contributions the employer is also due to make a deficit correction payment of £37.8 million by March 2018. Members pay contributions of 5% of pensionable earnings.

However, while the shortfall has reduced there is still a deficit which needs to be corrected.

Following discussions between the TfL Pension Fund Trustee and the employer the following agreement has been reached:

• To increase the employer future service contribution rate from 20.4% to 25.55%
• A deficit recovery period running until 2023
• Reduce the employer deficit correction contributions from 10.6% to 5.45%
• The employer to make a one off lump payment of £37.8 million in March 2018
• Member contributions to remain at 5% with no changes to benefits

The National Executive Committee in consideration noted and adopted the following report on 19th April 2016:

“We note that the Trustee and TfL have agreed to a set of proposals to recoup the deficit in the TfL Pension Fund.

While it is noted that our representatives on the Trustee Board requested that the recovery period should be shorter, this union accepts the final agreed proposals.”

I will keep you informed of any developments.

Yours sincerely,

Mick Cash

General Secretary