Bank injects £7m into pension fund hit by plunging stocks

The pension fund for retired Bank of England employees has fallen into deficit due to plunging share prices, the Bank disclosed yesterday.

Its annual report showed that the fund swung from a £206m surplus at February last year to a £293m shortfall a year later.

The Bank said it had decided to make a contribution to the scheme for the first time in eight years but insisted this was based on long-term forecasts for the solvency of the fund.

The figures were based on the new FRS17 accounting standard that will soon force companies to reveal a "snapshot" picture of their pension fund.

A Bank spokesman said that the traditional method of calculation, based on actuarial estimates of longevity and likely rates of return, showed the fund was in surplus. Since 28 February when the snapshot was taken the rise in the stock markets would have reduced the deficit by between £80m and £100m, he said.

The Bank has decided to pay about £7m into the fund in the current year, representing 10 per cent of the £70m salary bill for its current 2,000 workers. Employees do not have to contribute to the fund, which currently has 14,500 members. The Bank's deficit is minuscule compared with the multibillion-pound shortfalls in Britain's major corporations that have been exposed by FRS17.

The chill winds of the global slowdown have also affected the value of the Bank's properties, the report showed. Its accountants have written down the value of its estate - which primarily consists of its historic Threadneedle Street building - by 22 per cent, or £55m, to £196m to reflect the downturn in the market for office space.

In a separate move the Bank announced that Brendan Barber, the incoming secretary general of the TUC, would join the Bank's Court of Directors. He will sit alongside Bill Morris, head of the TGWU union, whose reappointment was announced yesterday - making it the first time the court had included two trade unionists.

The Treasury also appointed Peter Jay, the former ambassador to Washington and lieutenant to the late disgraced tycoon Robert Maxwell, David Potter, founder of the IT group Psion, and Heather Rabbatts, a governor of the London School of Economics, to the court.

Mervyn King, the Bank's governor-elect, is to be on the same pay regime as the outgoing Governor, Sir Edward George, the Bank said. His starting salary is £263,000.