TFL PENSION FUND FUNDING UPDATE – POST 2023 AGM

My Ref: MRP 2/1                                                                               

 

12^th October 2023

 

Circular Num: NP/179 /23

 

To: The Secretary All Branches, Regional Councils

       All Underground and Former LT Employers 

 

Dear Colleagues,

TFL PENSION FUND FUNDING UPDATE – POST 2023 AGM

Following the Annual Members Meeting of the TfL Pension Fund held on 6^th October 2023 I can report that we are pleased to be advised by the Trustee’s that funding position of this final salary pension schemes continues to remain in excellent shape. I can reveal that based on the latest actuarial report of 31^st March 2023 the fund has a surplus of over £2 billion and a funding level of 116.9%. To put this into perspective, if you had to pay all pensioners, dependents, and current contributing members their benefits in full tomorrow there would be £2 billion left in the pot.

The latest funding position clearly demonstrates yet again that the TfL Pension Fund is in excellent shape and does not need changing or modernising.  

The next full actuarial triennial valuation is due on 31^st March 2024 and while the recent funding estimate is only a “snapshot” of the funding position, you will see from the table below that since the last full valuation 31^st March 2021 the TfL Pension Fund Trustee Board has continued to deliver improvements in the funding position:            

	31.03.2021	31.03.2022	31.03.2023
Assets (Money)	£ 13,085 m	£ 14,423 m	£ 14,163 m
Liabilities (Benefits)	£ 12,906 m	£ 13,672 m	£ 12,116 m
Surplus	£ 179 m	£ 751 m	£ 2,047 m
Funding Level	101.4 %	105.5 %	116.9 %

While there has been a small reduction in assets between actuarial reports, the Trustees have continued to outperform their investment objectives (benchmarks) which can be mainly contributed to investment diversification and active management which has generated strong returns over the past 12 to18 months.

This latest indication of the ongoing improvement of the funding level of the TfL Pension Fund can be contributed to several factors which include the recent increase in the yield on gilts, which has seen the value placed on liabilities fall, but more importantly good Trustee governance when it comes to matters such as making the right investment decisions. 

This effective Trustee governance has been established for several reasons which includes having a diverse trustee board which not only has employer representation but also has, more importantly, member representation which given beneficiaries for many years a voice when it comes to their retirement benefits. 

I can advise that your RMT appointed Trustee directly from the Union and our Pension Consultative Committee Trustees, continue to carry out great work for all members of the fund. 

The above funding position again demonstrates that decent, well managed final salary pension schemes, such as the TfL Pension Fund, can continue to deliver fair retirement benefits for its members to give them financial security in retirement. 

I will keep you informed of any developments.

 

Yours sincerely

 

 

Michael Lynch

General Secretary