1. Purpose

1.1. The Funding Agreement set out the requirements of the Government in relation to pensions. The dates of the first two submission requirements were amended by the

Government to provide an extension of two weeks, following the death of Her Majesty

Queen Elizabeth II. 1.2. On 27 September 2022, TfL met the first submission requirement, providing the

Government with background on the Scheme, TfL’s views on the Independent Pensions

Review and a workplan setting out the steps that would be necessary for moving the

Scheme into a long-term, financially sustainable position. A link to the 27 September submission is included at Appendix 1. 1.3. This paper addresses the second submission requirement set out in the Agreement. In accordance with the Government’s requirements, this paper sets out:

A. Two categories of options for future service benefit reform with no more than two sub-options under each, all of which will aim to reduce the cost of future service benefits by circa £100m per annum.

B. Rationale as to why other potential options for reform have been ruled out.

C. And:

• core design principles for each sub-option (including but not limited to salary risk, retirement age, indexation and possible accrual rates); • an assessment of how each sub-option meets key criteria required by the Government (consistent with the assessment principles outlined by the Independent Pensions Review) related to deliverability; affordability (assessment of cost savings); sustainability (risk); fairness; and how it compares to other equivalent pension schemes; • a view on what Government support is needed to progress the shortlisted options alongside proposals for how past service benefit liabilities will be managed under these proposals. 1.4. For the avoidance of doubt, this paper does not contain proposals for reform. The paper continues to include comparison to TfL’s current pension arrangements and the implementation of anything else will remain subject to further detailed work, the availability of appropriate legislation, relevant consultation with affected members and their representatives and TfL’s decision-making processes.