Liz Ashford, TSB’s new HR Director, needs to learn one thing very quickly: TSB staff are not stupid. The pension scheme changes she announced yesterday are not about “improving choice, flexibility, support and service provided to Partners”. The changes are being driven by TSB’s desperate need to cut costs following its disastrous IT migration and the mis-management of the business by senior executives who subsequently swanned off with pots of gold. Yet again, TSB staff are having to pay the costs of management failure, this time with the value of their pension pots.
The Proposed Changes
TSB is planning to close the current scheme on 31st January 2020 and replace it with a new one from 1st February 2020. The new scheme will be run by Legal and General.
TSB is trying to convince staff that it is making the changes for their benefit. There will be lots of presentations and glossy brochures flying around trying to convince staff that the changes are in their best interests. Members shouldn’t be taken in by anything the bank says on this issue.
The costs of running the scheme – which is called the ‘annual management charge’ – are being passed from the TSB to every member of staff and those costs will be deducted from their pension pots every year until they retire. That management charge could be increased by Legal and General at any time and more of every members’ pension pots will be eaten up by fees.
There is also something called the ‘Fund Management Charge’, which covers the costs of managing the different investment funds TSB is proposing to increase that charge by 36.36%.
We will return to the issue of charges in forthcoming Newsletters.
Now TSB has said that these two costs are very low by industry standards. If that’s the case, why doesn’t it continue to pay the costs rather than passing them on to hardworking members of staff? TSB knows full well that over time those costs are likely to increase significantly and it wants to pass on that financial burden to staff.
It’s also part of Debbie Crosbie’s plan to get the business ready for an eventual sale by disposing of any pension scheme liabilities.
What kind of organisation wouldn’t want the discretion to enhance the pensions of those members of staff who leave on ill-health early retirement? Whilst we have not dealt with any cases in TSB, we have seen this discretion used in the Lloyds scheme. One case we dealt a few years ago involved a member of staff who was diagnosed with terminal cancer. Lloyds enhanced his pension to the maximum amount in order to protect the member and his family. For TSB to propose to get rid of that discretion to save money, says all you need to know about the priorities of the current TSB senior management team.
The Next Steps
Before it can make the changes, the law says TSB must open up a 60-day consultation period. That consultation periods ends on 30th November. We will be writing to members next week providing them with a letter to send to the bank opposing the changes to the pension scheme.
Members with any questions on this Newsletter can contact the Union’s Advice Team on 01234 716029.