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Does The 2% Pensions Cap Fit?
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Date: 26th Apr 2010
LTU has discovered that the pensions of Eric Daniels, Chief Executive, and Archie Kane, Group Executive Director, Insurance, the only two members of the GEC who are in Final Salary Pension Schemes, will not be subject to the same 2% cap that they themselves are attempting to impose on everyone else.
As part of its announcement of the harmonised terms and conditions in the merged Lloyds TSB and HBOS Banks, the Lloyds Banking Group has set out its proposals for the treatment of pensions across the Group.
The Bank intends to limit pensionable pay increases to 2%, or RPI if lower, for those employees in the defined benefit or ‘final salary’ schemes, with effect from 1st April 2010. In future, if a member of staff is awarded a salary increase of 5%, then anything over 2%, or RPI is lower, will be non-pensionable. In effect, going forward, staff will have two salaries: a basic salary and a lower pensionable salary.
The Chairman of the Group’s Remuneration Committee said in the recent Report and Accounts “The committee does have concerns that by continuing to hold base pay levels at 2008 levels, remuneration for the executive directors is likely to become uncompetitive versus our peer group.” The implication of that statement is that when salaries are reviewed again in December 2010 and 2011, Messrs Daniels and Kane can expect extra large salary increases all of which will be fully pensionable.
Commenting on the discovery, Mark Brown, Assistant General Secretary at Lloyds TSB Group Union, has said:
“The sheer arrogance of this decision will stick in the throats of all right minded members of staff, regardless of whatever they may think about the changes to the pensions schemes. Any pension changes should apply to everyone equally or no one at all. One has to question the judgement of people who believe this is in any way morally defensible.”
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