Tube drivers to keep gold-plated pensions after Sadiq Khan bows to unions
Rail workers took six days of strike action in 2022 and 2023, in part due to changes being proposed to their lucrative pension deals which could have seen them working for five years longer.
But the rail union, RMT, confirmed this week no changes would be made to the scheme in what it described as a 'huge victory' over Transport for London (TfL).
An underground driver who has worked for TfL for 40 years can expect a pension income of nearly £50,000. But in 2020, a review into the pension fund was launched by the Mayor of London with an aim to save £100m a year.
Discussions included moving rail workers on to less generous plans similar to those offered to MPs and NHS workers. TfL also considered increasing their retirement age from 60 to 65.
Mick Lynch, the general secretary of RMT, said: 'This is a huge victory for our members who showed tremendous tenacity to stand together to defend their pensions.
'We were told these cuts were inevitable, but our members' determination has ensured that these attacks on pensions have been thwarted.'
He added: 'This win proves that when workers are organised and willing to take strike action, they can defeat even the most determined attacks on their rights and living standards.
'RMT will continue to stand ready to take action to protect our members if any such attacks on pensions or terms and conditions come to pass in the future.'
The TfL fund, which has 85,439 members, is a generous final salary pension scheme, offering a 60th of a tube driver's salary for every year of service.
For a tube driver who works at TfL for 40 years, this would be equivalent to two thirds of their final salary – or £46,788, if they retire on the current salary of £70,182.
TfL pays contributions of 10.5pc of salary for new starters – with employees contributing 5pc. The transport body pays 11.67pc for existing staff. The fund had a surplus of £3bn at its latest valuation in March 2024, with auditors estimating that it had a funding level of 125pc.
A 2022 review, chaired by Sir Brendan Barber, a former trade union official, found that TfL could save up to £154.4m a year by switching to a Career Average Revalued Earnings (Care) scheme.
Other public sector schemes, including that for MPs and NHS workers, have switched to Care in the last decade. Another consideration was to put tube drivers on the Local Government Pension Scheme offered to council staff.
In 2023, the unions agreed with TfL that no changes would be made until September 2026, but last month it was confirmed that the pension review team had been totally disbanded.
Tom Selby, of pension provider AJ Bell, said: 'The pensions enjoyed by tube drivers are incredibly generous final salary arrangements – the sort that most private sector workers could only dream of.
'The fact these are going to be maintained, including the retirement age of 60, will be seen as a huge victory for employees and Mick Lynch, the RMT trade union's firebrand boss.
'It may also be a reflection of the improved funding position defined benefit schemes have enjoyed in recent years, in large part as a result of shifts in gilt yields which have reduced the accounting value of liabilities.'
Pensions can be taken at 60 with no reduction, annual payments will be linked to the retail prices index, rather than consumer prices index and TfL will be on the hook for any future deficits.
The victory comes days after Aslef called off some planned strikes on London's Elizabeth line after rejecting a pay deal of £76,000. Almost 500 drivers had been set to walk out during March.
A spokesman for Transport for London said: 'As part of our funding agreements with the last government, we were required to carry out a review of the TfL Pension Fund. Extensive work was carried out and we have always held the position that 'do nothing' remained an option throughout the process.
'No requirement on pensions featured in our most recent capital funding agreement with the new Government and our view is that the original condition has now been met. There are no plans being developed or actively considered by TfL to change the TfL Pension Fund.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Times
2 hours ago
- Times
Rachel Reeves could solve all her problems with a VAT raid
How can the government fill the £50 billion fiscal black hole that the National Institute for Economic and Social Research identified last week? Abandoning our fiscal rules is a non-starter. These are a weak enough constraint as it is, and with the UK already borrowing more, and at higher costs, than most other major economies, our room to ramp up debt is severely limited. Spending cuts are neither impossible nor impractical. Current plans suggest that annual government spending in the 2029-30 tax year will be about £60 billion higher in real terms than it is now. Limiting the overall increase to inflation over the next few years would solve the problem. Yet a large part of government spending — on debt interest, pensions and an ailing NHS — is hard to manage in the short term. The result is that spending uplifts linked only to inflation would require a degree of radicalism that the government lacks the policy-thinking, democratic mandate and political will to deliver. If ministers couldn't trim around the edges of the welfare bill, then saving £50 billion is going to be a tall order. And so we come, inevitably, to tax increases. The National Institute for Economic and Social Research correctly argues against further taxes on jobs, savings, investment and profits, noting their anti-growth impact. It correctly points out that revenue increases on this scale must come from the big, broad-based taxes: namely, income tax or VAT. The conventional wisdom prefers to raise income tax rates because it's a progressive tax, meaning that the burden is spread more 'fairly', with the better-off bearing a relatively higher burden. But I believe there is a better option from an economic standpoint. • Read more money advice and tips on investing from our experts Britain's VAT base is exceptionally narrow by international standards. Broadening it could raise huge amounts of revenue while also simplifying the tax system and removing some of the economic distortions it creates. Both the politics and the policy design of such a move would be challenging, to say the least, but they are not insurmountable. Why VAT? First, properly structured consumption taxes are relatively benign from an economic standpoint. Unlike taxes on income or profits, they don't discourage saving and investment. Second, a narrow VAT base — the result of too many exemptions, reduced and zero rates, and a high registration threshold — causes all kinds of problems of its own. It makes VAT extremely complicated and burdensome to administer. It distorts economic decision-making in a variety of unhelpful ways, like the huge pile-up of small businesses that are just below the registration threshold. A narrow VAT base is also a very inefficient way to help the poor, since most of the benefit in cash terms goes to those who spend the most — that is, the rich — even if that spending is a relatively smaller share of their household disposable income. • Parents beat VAT on private school fees raid by paying £500m up front Third, the potential revenue gains are huge. To use an extreme example, if our VAT base were as broad as New Zealand's (the global paragon of simplicity and efficiency) we could raise at least an extra £150 billion by 2029/30. That's enough to balance the budget, compensate lower-income households, and introduce offsetting pro-growth tax cuts all at the same time. Of course, there would be downsides. We would see a one-off boost to inflation (of perhaps 3-4 per cent) when the standard rate of VAT was applied to a much wider range of goods and services. And small companies would complain loudly about being dragged into the VAT net, even if, in the long run, businesses overall would benefit mightily from simplification. But when we're talking about fiscal consolidation on this scale, there are no pain-free options; it is all about trade-offs. The government ought to prioritise spending restraint as well as pro-growth regulatory reforms to boost the economy. But if higher taxes are unavoidable, broadening the VAT base has much more to recommend it economically than any other option. Tom Clougherty is the executive director at the Institute of Economic Affairs, a free-market think tank based in London
Daily Record
3 hours ago
- Daily Record
Millions of UK drivers to face extra £18 charge in 'war on traffic'
The move is likely to irritate some Millions of drivers, including those who switched to eco-friendly vehicles to dodge fees, are set to be hit by a massive hike in London's Congestion Charge. From Christmas Day 2025, electric vehicles will no longer be exempt from the daily charge, with the cost for all cars jumping from £15 to £18 just a week later. According to Transport for London (TfL) data obtained by Auto Express through Freedom of Information laws, this double blow could generate an additional £80 million to £91 million annually – a total of up to £455 million over five years. This marks the most significant financial setback yet for EV owners in the capital, following the abolition of free parking in certain boroughs and the removal of the luxury car tax exemption. Other cities across the nation are likely to follow London's lead. This crackdown comes despite London Mayor Sadiq Khan's repeated assertions that he wants to promote the use of cleaner vehicles. Green drivers 'penalised' Tom Jervis, consumer editor at Auto Express, expressed his concerns: "While we recognise the importance of funding clean air initiatives and reducing congestion in London, it's deeply concerning that electric vehicle drivers – many of whom made the switch in good faith – will now be penalised." EV buyers have already lost their exemption from the luxury car tax, and now this. Removing the Congestion Charge exemption will hit ordinary drivers hard – especially those who moved to an EV specifically to avoid such charges and reduce their environmental impact. "If we're serious about encouraging the uptake of electric vehicles, we need consistent, long-term incentives – not policies that penalise those who've already done the right thing. Electric vehicle owners should be supported, not squeezed." How the cash piles up According to TfL's own figures, the removal of the EV exemption will generate at least £75 million a year – rising to almost £83 million if a proposed 25% EV discount is scrapped. Additionally, the £3-a-day increase in the Congestion Charge will accumulate to £55 million over five years. Combined, this means between £415 million and £455 million extra in TfL's coffers by 2031. TfL predicts its total Congestion Charge income will leap from £240 million in 2024/25 to £320 million in 2026/27. Small mercy – but for how long? From January 2026, electric car drivers will be able to get a 25% discount if they register for Auto Pay – or 50% for vans – but even that is only guaranteed for five years before being halved. Mr Jervis encouraged EV drivers to sign up to Auto Pay immediately to maximise the offer, stating: "For someone driving into London five days a week, this is a difference of £1,035 a year when the charge rises to £18, so is well worth doing." The decision is likely to reignite discussions about whether motorists are being used as cash cows under the pretence of green policy – and whether London's "war on traffic" is now turning against those who believed they were on the right side of the fight.
Daily Mirror
3 hours ago
- Daily Mirror
Many drivers to be hit with new £18 charge in traffic crackdown
The charge is increasing, and many drivers currently exempt will have to pay it from later in 2025 Millions of drivers, including those who switched to eco-friendly vehicles to dodge the fee, are set for a shock as London's Congestion Charge is set to skyrocket. From Christmas Day 2025, electric vehicles will no longer be exempt from the daily charge, with the cost for all cars jumping from £15 to £18 just seven days later. Data from Transport for London (TfL), obtained by Auto Express through Freedom of Information requests, reveals this double blow could generate an additional £80 million to £91 million annually – a staggering total of up to £455 million over five years. This marks the most significant hit yet to the financial benefits of operating an EV in the capital, following the abolition of free parking in certain boroughs and the removal of the luxury car tax exemption. The capital's move is expected to be mirrored by other cities nationwide. This clampdown comes despite repeated assurances from London Mayor Sadiq Khan that he aims to incentivise drivers to transition to cleaner vehicles. Green motorists 'penalised' Tom Jervis, consumer editor at Auto Express, expressed his concerns: "While we recognise the importance of funding clean air initiatives and reducing congestion in London, it's deeply concerning that electric vehicle drivers – many of whom made the switch in good faith – will now be penalised." EV buyers have already lost their exemption from the luxury car tax, and now this. Removing the Congestion Charge exemption will hit ordinary drivers hard – especially those who moved to an EV specifically to avoid such charges and reduce their environmental impact. "If we're serious about encouraging the uptake of electric vehicles, we need consistent, long-term incentives – not policies that penalise those who've already done the right thing. Electric vehicle owners should be supported, not squeezed." How the cash stacks up According to TfL's own figures, the removal of the EV exemption could generate at least £75 million a year – rising to almost £83 million if a proposed 25% EV discount is scrapped. In addition, the £3-a-day increase in the Congestion Charge could add up to £55 million over five years. Combined, this means between £415 million and £455 million extra in TfL's coffers by 2031. TfL predicts its total Congestion Charge income will jump from £240 million in 2024/25 to £320 million in 2026/27. Small mercy – but for how long? From January 2026, electric car drivers will be able to get a 25% discount if they register for Auto Pay – or 50% for vans – but even that is only guaranteed for five years before being halved. Mr Jervis urged EV drivers to sign up to Auto Pay immediately to make the most of the offer, saying: "For someone driving into London five days a week, this is a difference of £1,035 a year when the charge rises to £18, so is well worth doing." The move is expected to reignite debate over whether motorists are being treated as cash cows under the guise of green policy – and whether London's war on traffic is now turning on those who thought they were on the right side of the battle.
