Co-operative in talks to split its £9 billion pension plan

THE CO-OPERATIVE Bank and its former parent the Co-operative Group have begun talks to separate their £9billion pension scheme.

The move would mark a further break between the two parties, but agreeing how to split the multi-billion assets and liabilities could prove fraught.

Under the current terms of the scheme – which has 90,000 members comprising current and former staff – both businesses are liable for each other’s pensions. Should one business fail, the other would be left in charge of the whole scheme.

The bank separated from the group in 2013 after it ran up huge losses and was taken over by its lenders. But the parent group – focused on supermarket and funeral businesses – retains a 20 per cent stake in the bank along with its share of the pension scheme.

Co-op Bank said in a statement: ‘The group and the bank have entered good faith discussions to divide the scheme by reaching agreement so that the liabilities properly attributable to the bank [and an equivalent proportion of assets] would be transferred to a separate scheme.’ It added that no agreement had yet been reached.

The bank has warned investors that it is unclear how much it will have to pay if it wants to exit the current pension scheme. It is also uncertain whether the trustees will agree to the move.

The pension fund trustees, the bank and the group all declined to comment further this weekend.

The bank remains heavily lossmaking, reporting earlier this month that it lost £610million last year, compared with £264million the previous year.

The group made a narrow profit last year of £23million, down from £124million the previous year.