Move To RPI Saves Lloyds £250m
26 July 2012 (PLANSPONSOREurope.com) - Lloyds Banking Group’s move from using the consumer price index to the retail price index to calculate some of its defined benefit scheme obligations has resulted in a £250m fall in its DB obligation, according to the group’s 2012 half year results.
The banking giant’s results reveal that following a review of policy in respect of discretionary pension increases in relation to the group’s defined benefit pension schemes, increases in certain schemes are now linked to the Consumer Price Index rather than the Retail Price Index. The impact of this change, it says, is a reduction in the group’s defined benefit obligation of £250m. The benefit of which is recognised in the Group’s income statement in the first half of 2012.
Meanwhile the group says within Life, Pensions and Investments it recognises a “large opportunity” in the corporate pensions market as schemes move towards auto-enrolment and a shift from defined benefit to defined contribution schemes, adding it is continue to explore opportunities within the annuity market.