BGN Entrepreneur

Billions of pounds of taxpayers’ money has been earmarked to plug the gaping black hole in Lloyds TSB’s gold standard final salary pension scheme.
In a letter seen by the Daily Mail, the trustees revealed plans to inject £1bn of its assets into the pension pot. A further £4bn will be used as security if the bank, which is 43pc owned by the taxpayer, fails to pay off the deficit over a 16-year period. The letter, sent to an estimated 30000 active members, revealed that the combined deficit of its two main group pensions has more than doubled from £1.5bn in June 2005, to £3.7bn three years later. It admitted the deficit is likely to have grown ever since then because of further falls on the stock market.
Earlier this month, AlphaValue, a French company that specializes in equity research, said Lloyds Banking Group, which includes HBOS and Scottish Widows, ahs underestimated its deficit by £12.8bn.
The trustees gave further assurances, saying that it would take any additional steps necessary to protect scheme members in light of the bank’s disastrous takeover of HBOS last September.
The plan could be implemented by the end o f the month if the final details are approved by the Pension Regulator. The black horse bank’s pension scheme remains open to existing members. A spokesman for Lloyds said that they’ve done the right thing in communicating these plans to their members, as is standard practice.
Although the bank refused to go into further details, it said the assets used as security would be a mix of investment grade bonds, property, bonds, gilts and mortgage-backed securities.
If these fall in value, the bank will have to inject more assets into the security scheme. The news will only add to the sense of injustice felt by taxpayers. Those who do not work in banks propped up by the taxpayer are protected by the Pension Protection Fund if their scheme goes bust.
The latest revelation also comes on the back of data from actuary Lane Clark & Peacock which says the 100 largest multinationals have been plunged into a record £200bn deficit by the global financial crisis.

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