The Times and Financial Times have reported that the Trustee responsible for managing Lloyds Banking Group Pension Schemes with assets worth £50 billion was forced into a fire sale of equities and faced collateral calls of billions of pounds at the height of the gilts market crisis following the September mini budget market meltdown.

We know this because of some quite astonishing testimony given to the Work and Pensions Select Committee last week by Mr. Henry Tapper, who apparently provides pension market analysis, and happens to be the partner of Ms. Stella Eastwood, who is Head of Group Pensions at Lloyds Banking Group. In his evidence, Tapper said:

“I live with the CEO of a large defined benefit plan which needed to liquidate a large proportion of its equity holdings and seek a line of credit from its sponsor. Much of the money posted as collateral won’t be seen again, the assets of the scheme are depleted, and much money has been spent in the liquidation process”.

Notwithstanding the issue of the fire sale, which will discuss later, the fact is Mr. Tapper should not have known what the Trustee and Lloyds Banking Group were doing to deal with the gilts market crisis. That was price sensitive information and confidential. If Ms. Eastwood told her partner what was happening, that was a clear breach of confidentiality and the Group’s Colleague Conduct Policy. Presumably this will be the subject of a robust investigation by the Trustee and Lloyds and we wait to see whether this is ignored or dealt with properly. We represent ordinary members of staff in Lloyds and Halifax who are routinely disciplined for much less.

At the time the gilts crisis was going on, Lloyds said that: “The impact of the recent volatility has had no material impact on the funding position of the pension schemes”. Members were also being reassured using almost exactly the same words.

The Trustee and Lloyds need to come clean about what went on. When Lloyds says that “recent volatility has had no material impact on the funding position of the pension schemes”, what did it mean? And, more importantly, was it being truthful given Mr Tapper’s comment that the “the assets of the scheme are depleted”? Why was the Trustee in this position in the first place? How much money was lost? The Chairman of the Trustee Board, Mr. Harry Baines, who it seems never responds to letters from members of the pension schemes, needs to issue an urgent statement setting out exactly what happened. He’s paid a lot of money and needs to explain his actions to the people whose money he manages.

Members with any questions on this should contact the Union’s Advice Team on 01234 262868 (choose Option 1).


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