Conservative London mayoral candidate pledges to cut employers’ TfL pension scheme contributions

London mayoral candidate for the Conservative Party, Shaun Bailey, has promised to cut the employer contribution rate to the Transport for London (TfL) pension scheme from 31 per cent to 13 per cent if elected.

As reported by the Sunday Telegraph, Bailey stated that he would cut the contribution rate to the public sector scheme average (13 per cent) for new employees and look to move existing members down to the lower rate.

He claimed that, since current London Mayor, Sadiq Khan, has been in office, TfL has paid £1.4bn in employer pension contributions, while if the 13 per cent rate had been used this figure would be £588m.

The Transport for London Pension Fund is a ‘balance of cost’ defined benefit scheme where employees pay 5 per cent of salary and the employer pays the additional contributions necessary to fund the benefit promise on a ‘balance of cost’ basis.

The scheme’s actuarial valuation of the public sector section, as at March 2018, revealed a deficit of £603m.

Speaking to the Sunday Telegraph, Bailey said: “TfL has one of the most extravagant pension systems in the public sector, along with some of the highest-paid employees.

“With TfL in financial difficulty, taxpayers’ money should go towards services – not gold-plated pensions.”

In response, a London Labour spokesperson told the Sunday Telegraph: “Sadiq Khan has spent four years cleaning up after the financial mess that Boris Johnson created at TfL.

“While Boris Johnson was mayor, fares increased by 42 per cent, but TfL’s operating costs went up every year, its debt increased by £7bn.

“In stark contrast, Sadiq brought TfL’s net deficit down by 71 per cent over four years and increased its cash balances by 13 per cent, all while freezing fares.

“The pandemic is the sole cause of the financial difficulties facing TfL and other transport providers across the world.”

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