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SWIP – Money For Nothing
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Date: 14th Oct 2004
The staff reaction to LTU’s criticisms of SWIPs management of the Lloyds TSB Pension Funds has been unprecedented. Staff who are criticised on a daily basis about their own performance are understandably concerned that over the past five years the cumulative annualised return for the No 1 Pension Fund fell by 1.2% compared to the fund benchmark which fell by just 0.2% and SWIP are still managing over 80% of the combined funds.
LTU have written to the Bank’s Pensions Department asking them to provide us with details about the Pension Funds, their performance over the last three years and details of the contractual relationship between the Pension Funds and SWIP.
Since 1999 SWIP has charged the No 1 and No 2 Funds £33.5million in management fees but their performance over the same period has been less than impressive. SWIP’s pre-tax profits last year amounted to just £2million at a time when the Lloyds TSB Pension Funds paid management fees of £8.9million. Are the Lloyds TSB Pension Funds propping up an unprofitable business?
In our letter to the Bank LTU have asked whether under the current contract between SWIP and the Pension Funds, the Trustees have the power to levy fines for under-performance. If they don’t, and there are no sanctions available to the Trustees, then there is no incentive for SWIP to ensure they outperform the agreed benchmarks. It seems that there is no specific penalty for under-performing and no specific reward for over-performing an agreed upon benchmark.
The Trustees met in September and will be meeting again in November to discuss the performance of SWIP and the specialist fund managers. Mark Brown, Assistant General Secretary, says “LTU’s position is clear. SWIP have had more than enough time to put things right but have consistently failed to do so. Enough is enough. SWIP has got to be replaced by Fund Managers who can deliver superior absolute performance”.
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