Having asked members of the pension scheme what they thought about the service being provided by Willis Towers Watson (WTW), who get paid millions for administering the Lloyds pension schemes, the Trustee has decided not to give members the results! That’s not what members expected. Participants were given the impression the results would be published.

Even if people were not led to expect to receive the results they should get them as a matter of good governance of a Trustee Board whose role is to promote the interests of its members. How can anyone justify that sort of secrecy?

The survey results must have been so damning about the performance of WTW that Trustee is keeping them secret. That’s unacceptable.

We’re not surprised about what pension scheme members think about WTW. In a recent survey we asked members who had contacted WTW in the previous 12 months how likely they would be to recommend WTS, and the results were some of the worst we have ever seen. Active members of the Union gave WTW an NPS of -82; pensioners members gave it an NPS of -72.

The WTW debacle brings into sharp focus how the Trustee Board is run.

History and the Law

The Pensions Act 1995 introduced the concept that trustee bodies should have one-third of their boards nominated by members. That legislation followed the ‘Maxwell Scandal’, which saw Robert Maxwell, who owned the Daily Mirror at the time, steal £450 million from the pension funds of Mirror Group Newspapers. However, that simple idea was implemented by some of the most complex regulations issued under the Act and that complexity was used by many schemes to simply ‘opt-out’. It was left to the Pension Act 2004 to simplify matters.

Under the 2004 Act and accompanying Code of Practice, if the number of nominations to the Trustee Board exceeded the number of vacancies available there needed to be a selection process. The Code of Practice did not specify a particular selection process but suggested some possible selection methods, including member ballots, selection panels, and selection by the existing trustees themselves.

The trustees of the Lloyds Bank No 1 and Lloyds Bank No 2 pension schemes agreed that it should adopt the selection and election method for appointing member nominated trustees. The process was successful and had the overwhelming support of all members of the schemes. Members of the schemes felt that there was a degree of democratic legitimacy in a process which allowed them to elect the candidates to represent them on the Trustee Board. However, whilst it was supported by the Trustee Board and members, we believe Lloyds didn’t like this structure because it couldn’t have total control of the pension schemes and control was important to Lloyds given the exposure it had to the pension scheme liabilities and deficits. And when our member nominated trustee candidates won all the available seats, time after time, that made Lloyds want to exert control even more. It was made clear to us that Lloyds never liked the fact that members of the schemes could elect their member nominated trustees directly.

Unsurprisingly then, following the HBOS merger Lloyds decided to get rid of the Trustee Boards of Lloyds Bank Pension Scheme No. 1, the Lloyds Bank Pension Scheme No. 2 and the HBOS Final Salary Pension Scheme and replace them with a single Trustee Board, which would cover all three pension schemes and have less trustees. Lloyds – with the support of Mr Harry Baines – then got rid of elections based on one member, one vote and replaced it with a selection process it could control.

The Current Board

Mr Harry Baines has been the Chairman of the Trustee Board since it was amalgamated to incorporate all the three main Lloyds pension schemes back in 2016. Prior to that, Mr Baines was the Chairman of the Halifax Pension Scheme.

The Trustee Board is made up of the same faces and there is no proper democratic oversight or accountability. The Member Nominated Trustees have not been democratically elected and have simply been appointed by the Board. The Board was appointed by Lloyds.

Mr Baines rarely responds to correspondence from members. Pensioners have been asking the Trustee to make sure they are told about their pension increases at the beginning of the year rather than the day before the increases are due to take effect. It’s not rocket science. Members have written to Mr. Baines on this issue, but he never responds. What’s the point in having a Trustee Board if it doesn’t engage with members on the issues that are important to them? WTW is another classic example. How much more evidence does the Trustee Board need about the woeful performance of WTW? Again, it does nothing.

To quote Lord Tennyson: “And slowly answered Arthur from the barge, ‘The old order changeth, yielding place to new.”.

The members of the Trustee Board need to ask themselves whether they are the right people for this job and whether they should yield to a new, democratically elected Board?

We will be covering some of these issues in more detail in future Newsletters. In the meantime, members with any questions on this Newsletter should contact the Union’s Advice Team on 01234 262868 (choose Option 1).


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