Lloyds Trade Union (LTU)

May 04, 2011 11:39 ET

Union Set To Challenge GBP 1 Billion Pension Savings

LONDON, UNITED KINGDOM--(Marketwire - May 4, 2011) -The largest independent trade union representing over 40,000 staff working for the Lloyds Banking Group – Lloyds Trade Union (LTU) ­ is to challenge the legality of the 2% pensions cap imposed by Lloyds Banking Group last year.

As part of its announcement of the harmonised terms and conditions in the merged Lloyds TSB and HBOS Banks, the Lloyds Banking Group set out its proposals for the treatment of pensions across the Group.

The Bank said that it would limit pensionable pay increases to 2% or RPI if lower for those employees in the defined benefit or 'final salary' schemes effective from 1st April, 2010.

The impact of the Bank's proposals on pensions for members of LTU and their families will range from bad to devastating. The Group's own benefit projections show that:

A member of staff earning £20k per annum with 25 years left to retirement will see his/her pension benefits reduced by £5k per annum. If that person lives until 80 he or she will lose at least £100k.

Using the same calculations, someone earning £40k will see his/her pension benefits reduced by £200k.

Even the pension benefits of a member of staff earning £40k with 5 years left to retirement will be cut by £2k per annum and if he/she lives until 80, total benefits will be reduced by £40k.

When it reported its half-year results last year the Bank said "The effect of this change (the imposition of the pensions cap) was to reduce the Group's retirement benefit obligations…by £1,019 million...". In fact, without the cap the Bank's income would have been reduced by approximately £1 billion in 2010 and that would have had a significant impact on profits.

Legal Action

LTU's legal advisers have written to the Bank and said that the pensions cap breaches Section 91 of the Pensions Act 1995; discriminates against younger members of the pension schemes contrary to Section 61 of the Equality Act 2010 and seeks to usurp the amendment powers of the Lloyds TSB No 1 Pension Scheme. Our legal advisers have given the Bank 14 days to respond and have said "we reserve the right of LTU and its members to commence proceedings in the High Court".

Our legal advisers have also written to the Chairman of the Lloyds TSB Group Pension Schemes asking the trustee to confirm that it will treat all basic salary as pensionable salary for the purposes of calculating pensions. The trustee is also asked to confirm "that it will not agree to an amendment to the definition of pensionable salary without obtaining the sanction in writing of not less than three quarters of the members". Once we have received responses from the Bank and the trustee those will be reviewed by our legal advisers before deciding the next steps in our campaign.

Union Comments

Mark Brown, General Secretary of LTU said:

"The pension changes are not needed and no case for them has ever been made out in negotiations with LTU. The Bank has not been able prove that the changes are needed to ensure the pension funds remain "sustainable" going forward.

"At LTU we believe that if something is patently wrong and unfair then those who have the ability to take action also have the responsibility to take action. That is what we intend to do.

About Lloyds Trade Union (LTU)

Lloyds Trade Union (LTU) is the largest independent trade union representing staff working in the Lloyds Banking Group, with over 40,000 members. In large parts of the Bank, LTU represents over 87% of all managers and staff.

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