In another stunning campaigning victory for the union, Antonio Horta-Osorio, Group Chief Executive of Lloyds Banking Group, has been forced to give up his lucrative final salary pension perk rather than have it voted down by institutional shareholders at the Annual General Meeting in May.

It’s taken Mr Horta-Osorio nearly 5 years to understand that it’s obscene to keep a valuable pension for himself, whilst he’s done away with the same benefit for everyone else in the bank. The fact that the Chairman and Board of Lloyds Banking Group allowed him to get away with it for so long raises a number of questions about their collective role in this sorry episode.

A few years ago – after he had done away with the uprating of pensions to take account of pay increases for all staff – Mr. Horta-Osorio said “We must remember that the way we see ourselves is not always the way others perceive us”. The perception amongst Lloyds staff at the time was that in respect of his own final salary pension: it was one rule for him and another for everyone else.

If we hadn’t vigorously pursued our campaign against ‘Two Pensions Osorio’ then the existence of his second pension would have remained a footnote in the Bank’s report and accounts. He now understands that you can’t withdraw a valuable benefit from our members and hope to get away with it scot free.

In a recent letter to the Chief Executive of the Investment Association, whose 250 members manage £7.7 trillion of assets, regarding Mr Horta-Osorio’s two pensions we said:

“The Group Chief Executive also continues to benefit from a defined benefit pension, which will be worth 6% of his base salary in the 12 months before he retires. Mr. Horta-Osório’s is still the only member of staff in Lloyds Banking Group who gets a final salary pension based on his salary before he retires. Staff who are members of one of the Group’s defined benefit pension schemes had the salary accrual element of their pensions withdrawn a number of years ago whilst the Bank was under Mr Horta-Osorio’s stewardship.

This is a big test for the IA’s new remuneration rules and we believe that it should ‘red-top’ Lloyds Banking Group.”

On Tuesday, having read our letters to the Investment Association and having seen the newspaper reports, Mr. Horta-Osorio concluded rightly that the Union’s campaign was going to be successful and he gave up his second pension.

However, that’s not the end of the issue. Mr Horta-Osorio’s pension allowance and that of the new Chief Financial Officer breach the new guidelines introduced by the Investment Association, which requires companies to reduce the gap between the pensions of senior executives and those of staff. That will be covered in a separate Newsletter. In the meantime, members with any questions can contact the Union’s Bedford Office on 01234 262868.

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