For decades, Lloyd's Register staff enjoyed a pension that offered them security and dignity in retirement – but that promise has been quietly unravelled by the company's management. Rob Coston speaks to Jim Harrison, former group legal director at Lloyd's Register and now a leading figure in the Pensioners Pre-97 Justice Alliance, about the campaign to restore their financial security
Many UK maritime professionals have been hit hard by inflation – but pensioners previously employed by Lloyd's Register have been badly affected.
At the centre of the dispute is the treatment of pension contributions made before 1997. Until relatively recently, Lloyd's Register increased pensions annually in line with inflation. Then, in 2016, those increases stopped. For retirees, many of whom had worked at the organisation for most of their careers, the impact has been profound.
Jim Harrison, former group legal director at Lloyd's Register and now a leading figure in the Pre-1997 Pensioners Alliance, describes the sense of shock felt by pensioners when they realised what had happened. 'We were told repeatedly, both orally and in writing, that this was one of the best pension schemes in the UK,' he says. 'We were reassured over many years, and then suddenly, without explanation or warning, the increases stopped.'
Profit before pensioners
The change exploits a longstanding gap in pensions legislation. Under the Pensions Act 1995, which came into force in 1997, employers are legally required to provide inflation-linked increases on pension benefits accrued after that date. There is, however, no such obligation for benefits built up before 1997. While many employers have continued to increase those pensions voluntarily, a minority have chosen not to. Lloyd's Register is one of them.
One retired Lloyd's Register employee, whose testimony was shared directly with the company's senior leadership, saw her annual pension rise by less than £300 over a ten-year period, despite a decade marked by significant inflation.
For pensioners, the timing could hardly have been worse. Inflation in the UK reached double digits in recent years, peaking at around 11 per cent, before easing back to between four and five per cent. Without inflation protection, pension incomes have steadily eroded in real terms.
'The older pensioners are the ones who are suffering most,' Mr Harrison explains. 'When costs rise sharply and your income stays flat, it becomes a real struggle.'
One retired Lloyd's Register employee, whose testimony was shared directly with the company's senior leadership, saw her annual pension rise by less than £300 over a ten-year period, despite a decade marked by significant inflation.
What has particularly angered pensioners has been the contrast between how they are treated and others connected to the organisation. Lloyd's Register remains financially successful, with pay rises for executives and profits flowing to its parent body, the Lloyd's Register Foundation.
'The company says it can't afford to do this,' Mr Harrison says, 'but we know the business is profitable yet pensioners, who gave decades of service, are being left behind. That is what incenses and bemuses us.'
The campaign
After years of correspondence and direct engagement with Lloyd's Register, including a face-to-face meeting with its chief executive and chief financial officer, pensioners have broadened their campaign. They have joined forces with retirees from companies including Hewlett-Packard, Johnson & Johnson and American Express, forming the Pensioners Pre-97 Justice Alliance.
Together, they are lobbying MPs and peers to amend current pensions legislation, restoring mandatory inflation protection to pre-1997 benefits.
'We've had very constructive one-on-one communications and group workshop meetings with members of the House of Commons and the House of Lords to fully brief them on our pension predicament and what they can do to help us out of this very unfortunate position. This has culminated in a new clause being tabled for inclusion in the Pensions Schemes Bill in the House of Commons and in the House of Lords by Dame Nia Griffith, MP, and Lord Bryn Davies of Brixton, respectively,' Mr Harrison says.
'This crucial new clause, and other clauses with a similar purpose, are receiving growing cross-party support in both Houses and so we remain hopeful that a sensible legislative solution will be found without imposing any additional financial burden on the government or taxpayers.'
A recent high point was a meeting on 7 January between pensions minister Torsten Bell and a delegation from the Alliance, in which a new angle for the campaign emerged.
'I pointed out to him that the Lloyd's Register pensioners are entirely disenfranchised and disassociated from the running of our pension scheme. We cannot attend its meetings or vote at them or choose any of the trustees. This has to change,' Mr Harrison said.
Mr Bell pointed the group in the direction of a DWP consultation (Trust-based pension schemes: Trustees and governance, building a stronger future), which the group will respond to and make clear that the government must not allow employer-controlled pension trustee boards to transfer pension fund surpluses to the employer before rectifying the inflation-linkage issue first.
'The bitter irony here is that the Pensions Act of 1995 was introduced to avoid another scandal like Robert Maxwell's large-scale robbing from the Mirror Group pension fund – whereas the new Pension Schemes Bill currently before Parliament is intended to facilitate the transfer of pension fund surpluses to employers without obliging the minority of rapacious employers to index-link pre-97 pensions first. Such an outcome would constitute a dreadful further injustice which we are determined should not happen – and so are a growing number of parliamentarians from all parties.'
Tags