He pledged yesterday to review what he described as overly generous pensions for TfL staff and bring them in line with other public sector pensions.
TfL is now trying to negotiate a government financial bailout to deal with the black hole in its finances caused by the coronavirus pandemic and the dramatic loss in commuter fares.
Ministers are calling for the extension of London’s congestion charge zone and further tariff hikes as part of a £ 1bn proposal to rescue the transport authority for the second time this year.
Currently, more than 26,000 TfL employees benefit from unreformed pensions, with staff contributing 5% while the employer contributes 31% 1.
In contrast to the local authority pension scheme (LGPS), the average employer’s contribution is 13% for staff pensions, including local administrations, education, police personnel and even employees of London City Hall and Fire Department.
Mr Bailey says that since the mayor has taken office, TfL has donated £ 1.4bn in
employer pension contribution payments. If the public sector average of 13% had been used, employer contributions would have totaled £ 588million.
Mr Bailey said this means the mayor overpaid £ 828million in pension contributions – the equivalent of funding nearly 14,000 police officers.
He promised to reduce TfL’s employer contribution from 31% to 13%, for all new employees and to explore whether existing employees can move on, in defiance of their unions.
Mr Bailey said: “TfL has one of the most extravagant pension systems in the public sector, with some of the highest paid employees. It does not mean anything. With TfL in financial trouble, taxpayers’ money should be spent on services, not gold-plated pensions.
“Sadiq Khan could have solved this problem early in his term and saved almost £ 1 billion. Instead, he left pensions unreformed, wreaked havoc on TfL’s finances and put services at risk.
He added: “As mayor, I will reform TfL’s pension system – bringing it in line with average public sector pensions. Help restore order to TfL’s finances and protect the services Londoners love. ”
But the town hall rejected the claims, accusing Mr Khan’s predecessor Boris Johnson of presiding over a regime of financial mismanagement.
A spokesperson for the London Labor Party said: “Sadiq Khan has spent four years cleaning up the financial mess Boris Johnson has created at TfL. While Boris Johnson was mayor, tariffs rose 42%, but TfL’s operating costs have increased each year, its debt has increased by £ 7 billion, millions have been wasted on vanity projects like the Garden Bridge and the government grant from TfL was given with no plans to replace.
“In contrast, Sadiq reduced TfL’s net deficit by 71% in 4 years and increased its cash balances by 13% – while freezing tariffs.
“The pandemic is the sole cause of the financial hardship facing TfL and other transportation providers across the world and anyone who claims otherwise just doesn’t understand the facts.”