EMPLOYEES of Bank of Scotland Ireland (BoSI) who transfer to the new company that will run down the lender's loan book when it closes this year face losing their pension entitlements.
The existing BoSI pension schemes – a defined benefit scheme and a hybrid scheme with a partial defined benefit plan – will close on 31 December when the lender gives up its Irish banking license and is absorbed into its parent company, Lloyds Banking Group.
It is proposed that 'ServCo', the service company which will manage the €32bn BoSI loan book after the bank withdraws from Ireland, will introduce a defined contribution scheme for employees who transfer. The terms of this scheme, including contribution levels, have not been finalised yet.
The planned changes to the pension arrangements are contained in a 162-page document detailing the terms of BoSI's wind-down. The bank said employees switching to the new service company will keep their existing salary and entitlements.
About 800 of BoSI's staff are set to move to the service company. The remainder of BoSI employees will be offered a role elsewhere with the bank's parent or will be made redundant.
Financial and legal advisers for Unite, the union representing most of BoSI's staff, are considering the proposal.
The union is also seeking a meeting with Lloyds Banking Group to address what it sees as a conflict of interest for BoSI's executive committee. BoSI executives are understood to be tendering for the contract to set up the administrative company that will run down the bank's Irish loan books.
Unite regional officer Brian Gallagher said the committee could not negotiate with the union over the future of staff on a neutral basis while it was also pitching for the business which might employ them. Gallagher also said the union wants Lloyds to disclose whether there are other bidders for the contract.
Lloyds is shutting BoSI because of the massive losses run up during the bank's life in Ireland. The lender, which closed its 44-strong Halifax branch network in June, lost €2.9bn in 2009. Loan losses in the first half of this year amounted to €1.5bn, Lloyds said earlier this month.