MPs enter the fray over Barclays’ plan for pension scheme
MPs are seeking answers from regulators and the trustees of the giant Barclays staff retirement fund over plans to allow the core UK bank to walk away from responsibility for honouring pension promises to 200,000 people.
Frank Field, chairman of the Commons work and pensions committee, said that he would be writing to the Pensions Regulator and the trustees after seeing coverage of the issue in The Times.
Under ringfencing proposals, responsibility for paying £42 billion of pensions of Barclays staff is being shifted from the entire bank to the division that includes the higher-risk investment bank, dubbed the casino bank.
With the pension fund suffering from a £7.2 billion shortfall, some members are concerned that they might not receive their promised pensions if the investment banking division were to fail in the next 50 years.
Mr Field, who played a role in pressing Sir Philip Green into making amends over the BHS pension fund scandal, said: “It looks like the elite bankers are up to their old tricks again. It’s not so much now a case of, ‘when will they ever learn?’ but ‘when will we as a society learn to expect this behaviour, and take action?’ ”
Others expressed concern yesterday. Steve Webb, a former pensions minister, said: “To attach the pension scheme to the riskier part of the bank seems shocking. It’s hard to believe that the interests of the pensioners were at the front of their minds when they made this decision.”
The Barclays scheme is one of the biggest in the private sector, with £41.8 billion of pensions to pay. However, it has only £34.6 billion in the kitty, as of September 2016.
Barclays is making the changes in response to government plans to make the financial system safer by forcing banks to ringfence their British retail banking operations with their own capital and an independent board. It is also slashing previously promised repair payments to the scheme.
Barclays and the pension fund trustees have defended the reforms, arguing that the bank has pledged up to £9 billion of assets to the fund, which would be able to take ownership if the investment banking division defaulted on its debts.
A report from Grant Thornton, the accountancy group, has said that the ringfencing would have “a potential adverse effect” on the scheme, but that the pledge of assets mitigated this risk.
Peter Goshawk, chairman of the trustees, wrote to some worried pensioners yesterday saying that he disagreed with opinions expressed in the media on the matter and he assured members that in future the scheme would have “a similar level of security . . . as is currently enjoyed”.
Barclays said last night that the “primary objective in its ringfencing plans has been to safeguard the interests of our pensioners.
“We believe that we have achieved this through the agreement reached with the trustees and their advisers, and have discussed our plans with the PRA [Prudential Regulation Authority], the Pensions Regulator and the independent expert reporting to the court (Grant Thornton).”Patrick Hosking, The Times