Trustees of a pension fund covering 1,400 bank workers in Wolverhampton today threatened a legal challenge to the merger of HBOS and Lloyds TSB.
The HBOS fund trustees have demanded protection to the scheme, which is believed to be now up to £5 billion in the red.
HBOS - Halifax Bank of Scotland - owns the Birmingham Midshires savings and loans business, which is Wolverhampton’s biggest private employer and has 1,400 staff at its offices in Pendeford.
The trustees want a legal commitment from Lloyds that the newly merged group, which will be part-owned by the Government after £17 billion taxpayer bail-out in October, will guarantee payments into the final salary scheme.
They estimate that its £95 million deficit two years ago has expanded massively to between £3 billion and £5 billion. If there isn’t enough money to fund the scheme fully, HBOS workers fear cuts in their pension payments when they retire.
Guardians of the 80,000-member pension fund are to meet on Friday to vote on whether to lodge a challenge to the Lloyds takeover of HBOS, which has to be approved in the High Court on January 12.
The takeover has already been given overwhelming support by shareholders of both banks, and a legal challenge by trustees would be the first of its kind.
The trustees voiced their worries in mid-December ahead of a meeting of HBOS shareholders in Birmingham to approve the deal.
The trustees said the merger would “substantially” weaken the fund’s protection.
HBOS said the deal was the “best form of protection” for its employees.
“The HBOS pension scheme will be backed by an even bigger and stronger group.”
3 Comments
Don’t have a pension. Couldn’t care for one. They are all a rip-off.
Don’t believe you should have the right to sit on your backside when you reach 65.
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Rob H- it’s less about ‘the right’ to sit on your backside at 65. What if you are incapable of working at that age? Sight problems, health problems, arthritis that prevent you to do your job.
Ok, so maybe you find another job you can do? But at that age, good luck at finding something on similar pay. So you need something (a pension) to top it up.
I think it’s a ridiculous suggestion that somebody, having worked 50years of their life, doesn’t get the opportunity to enjoy doing whatever they want to for their remaining 20 or so.
Anyhow, back to the article:
“They estimate that its £95 million deficit two years ago has expanded massively to between £3 billion and £5 billion.”
So HBOS has been run catastrophically badly for the last 10 years (high risk loans and 125% 6 times salary mortgages, bad investments in the US etc) and so their pension deficit increased to £3-5bn!
Now they’re being merged (effectively saved, because they were insolvent), they want the acquiror to guarantee their final salary scheme?
If they hadn’t been bought out, HBOS would not exist and thus it is likely they would have zero pension.
Perhaps they should be content with a defined contribution scheme like the rest of us?
….and don’t even get me started on the final salary schemes of the public sector. That one will be the next (very big) shoe (verging on a Doc Marten) to drop.
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Good for them - it’s interesting seeing that this is the STAFF challenging things, not a third party with ulterior motives! I know that I’d want the agreement in place that says as someone paying into a fund it’s protected when company number two comes along!
1) Rob -
This isn’t a RIGHT to sit on your bum; this is people prudently putting money aside for when they get older. I know I want to work past 65 right now, but I’m only 30 now. Who’s to say that I’ll be in a fit state to work at that age (might lose my sight, my arms, my eyes, my mind!) another ‘lifetime’ away for me! It’s clever for me to save for later.
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