The two consecutive quarters of decline caused by the Covid-19 lockdown pushed the UK officially into recession. The economy shrank 20.4% between April and June compared with the first three months of the year. To be blunt, now is not the time for LBAs to be looking for jobs. The recent story of 1,000 people applying for a reception job will become the norm over the next few months.
TSB has said that those who take the option of voluntary redundancy will start getting their VR notice letters from 21st August. TSB will want to get rid of staff as soon as possible and we would expect most LBAs to leave over the next few months, and certainly before the end of the year. That suits TSB, but it may not suit staff. Members who don’t want to become a Local Banker B may feel that the only option is to go for redundancy now. It’s not. You can make it clear on your preference form that you don’t want a Local Banker B role (question 2) and you don’t want voluntary redundancy (question 3). TSB has said: “We are proposing to phase out the LBA role in mid 2021, so managers will help you in finding an alternative role [the chances of that happening are next to zero] elsewhere in TSB during this time, we anticipate that we may need to commence a formal redundancy consultation process in 2021, however we will seek to avoid compulsory redundancies wherever possible”. There are three points members need to consider. First, the redundancy terms will be calculated in the same way whether you leave in September 2020 or June 2021. Second, if you need to find another job, that will be easier in mid 2021 than it will be over the next few months. Third, the chances of TSB finding you a suitable alternative role are next to zero. Members must complete the preference form because if they don’t TSB will assume they want to carry on working as a Local Banker B and don’t want to request VR.
The preference form needs to be completed by 5pm, Friday, 28th August. We would urge all members to discuss their options with the Union’s Advice Team on 01234 716029 (choose Option 1) before they submit their form.
£30,000 Worse Off Under DB Proposals
According a report produced by Insight Investment, members of the Lloyds TSB No 1 defined benefit pension scheme (which will include thousands of TSB members who transferred from Lloyds) could be up to £30,000 worse off under proposals being considered by the Government to change the way annual pension increases are calculated.
The UK Statistics Authority has proposed changing the way the Retail Price Index (RPI) is calculated. Specifically, it is proposing that RPI should be aligned with the Consumer Price Index including owner-occupiers’ housing costs. The Government has set up a consultation on the proposed reforms and that is due to close at the end of August. The consultation is mainly around whether the changes should be implemented with effect from 2025 or 2030.
According to the latest data there are some 13.5 million people in private sector pension schemes. Under the proposed changes, the annual measured rate of inflation, which would be used to calculate pension increases, would be lower on average by 1% a year. Insight Investment’s analysis shows that a member in a defined benefit pension scheme who is retiring at 65 on a pension income of £20,000 could lose in excess of £30,000 over the course of their retirement. Barnett Waddington, an actuarial consultancy, said that someone currently 50 with an RPI-linked pension paying £10,000 annually from age 60, would have previously expected to receive £500,000 in total if they lived to age 90. If the proposed changes are implemented that could be reduced to £425,000.
If a pension scheme’s increase rules make specific reference to RPI, which they do for the Lloyds TSB No 1 pension schemes, a change to the scheme rules is likely to be necessary in order to switch from RPI to CPIH.
Statutory Override?
Section 67 of the Pensions Act 1995 protects members’ past service rights and entitlements and there are restrictions placed on the power of amendment in the Lloyds TSB pension schemes rules. So, if the Government goes ahead with the changes then it would almost certainly have to introduce a statutory override or modification power to make it easier for schemes to make the changes.
This union and its members, many of whom live in marginal constituencies, would vehemently oppose such a change to pension scheme rules. We will keep members informed of developments but we don’t expect any changes to me made quickly given the current economic position.