Lloyds Banking Group could become the latest big UK company to axe its final salary pension for existing employees. The state-owned bank confirmed it has started work on standardising its employee terms and conditions, as part of its integration with the troubled lender HBOS.
The bank is reviewing existing employees' final salary pension scheme, although both Lloyds and HBOS closed their schemes to new members in 2003.
The revelation follows the announcements last month by rival bank Barclays and the grocer Morrisons that they were closing their final-salary schemes to existing members. Unions reacted angrily to the move by Barclays and are reported to be balloting staff on industrial action next month. The oil giant BP has recently said it will close its scheme to new members.
A Lloyds spokeswoman said: "We are reviewing our total reward package across the group, which naturally includes pensions. The group has not yet finalised its proposals or started consultation with its trade unions."
Unions are concerned that staff could be transferred into less attractive defined contribution schemes. The LTU, the biggest union at Lloyds,has hired actuaries at Lane Clark & Peacock to calculate how much staff could lose if Lloyds's three final-salary schemes are closed down. According to early estimates by actuaries, staff could lose at least £4bn in benefits.
On the separate issue of job losses, Lloyds has angered the union Unite with substantial jobs cuts this year. This month, after a further 1,200 job cuts emerged, Unite reacted angrily. The union said it was "groundhog" day because it estimated that 8,200 staff had already lost their jobs this year. At the time, Lloyds stressed 370 of the job cuts would be through the release of contract and agency staff and added it was also creating 180 permanent jobs across the merged group operations function.
The bank said: "The group's preference is to use natural turnover and to redeploy people wherever possible to retain their expertise and knowledge."
Next week, Lloyds will post its interim results and analysts at UBS forecast it will post pre-tax losses of about £6.3bn, largely resulting from £13bn of bad debts.
Tomorrow, the chiefs of Lloyds, Barclays, RBS, HSBC, Santander and Nationwide will meet the Chancellor Alistair Darling and the Business Secretary Lord Mandelson to discuss whether they are giving consumers and businesses sufficient access to credit.Reuse content