Union mulls strike over cap on Lloyds pension contributions

 
Tim Wallace
Follow Tim
LLOYDS Banking Group could have a strike on its hands as unions consult thousands of staff on a new cap to pension contributions.

Up to 35,000 workers are still contributing to final salary schemes – closed to new entrants more than a decade ago – and the bank is taking action to try to limit the cost of the pensions.

Currently the pensionable element of any pay rise for the workers is capped at two per cent per year.

That is designed to stop any staff getting big pay rises also getting a large rise in pensions, keeping longer-term costs down for Lloyds.

Now the bank wants to freeze it at current level, so the staff’s current salary will be their final salary under the scheme.

The vast majority of final salary schemes have closed to new entrants or even altogether in recent decades, as soaring life expectancy drives the cost of pensions through the roof.

Lloyds argues it is acting in line with industry practice.

“In line with many other UK companies, Lloyds Banking Group has been reviewing its pension arrangements,” the bank said.

“The group wants to ensure that its pension benefits are more balanced across the group, particularly as two-thirds of the group’s employees are not members of the defined benefit schemes.

But the union Accord said the move undermines trust in the firm.

“If the bank can break its promises to its longest serving and loyal employees about their pensions, then what is safe in terms of conditions of employment and other benefits?” the union said in a letter to Lloyds.

Accord is consulting with members on holding a strike ballot.