State-owned Lloyds Banking Group is likely to axe final-salary pension schemens. The bank is reviewing its pensions arrangements. Many fear that the review will end with the closure of its three final salary schemes to existing members and thir transfer to riskier defined contribution schemes.
Final salary schemes, also known as defined benefit schemes, can be very generous. They pay staff a set percentage of their final salary depending on their length of service. About 8.5 million people have a final salary pension scheme. A growing number of high-profile companies are closing the doors on these pension schemes for employees.Last month Barclays announced plans to close its final salary pension scheme.
Solidarity Executive member David Durant commented:-
"The closure of final salary schemes will lead to workers facing hardship in retirement. Defined contribution schemes are unlikely to produce the same benefits. Wherever possible the closure of final salary schemes should be resisted."