Barclays dumps its staff pensions into casino bank

BARCLAYS has been accused of endangering 250,000 workers’ nest eggs after dumping responsibility for its pension fund onto its casino banking arm.

as part of an industry-wide shake-up to make finance safer, the lender is splitting its retail section off from its more risky investment bank.

the aim is to keep ordinary customers sheltered from any problems which blow up in times of economic turmoil – and prevent future bailouts by the taxpayer.

But as part of the so-called ringfencing arrangement, Barclays has lumped its pension fund in with the investment bank.

Critics claim it means the scheme – which has 250,000 members and a £7.9bn funding black hole – will depend for its survival on the strength of risky bets made on global markets.

the alternative would have been to give responsibility for the pension pot to the retail bank, which will have its own separate board and cash reserves to protect it during times of trouble.

experts last night said they were shocked at the bank’s decision, and even the scheme’s own chairman has admitted it seems strange at first glance.

Former pensions minister Baroness altmann said: ‘it’s very important that the pension scheme isn’t just jettisoned into a risky business without proper funding. there would normally be a requirement for the rest of the bank to stand behind the scheme. if i were a trustee, i would want the scheme to be properly funded and have the backing of the full strength of Barclays.’ altmann called for action by the Pensions regulator, which oversees retirement schemes.

However, the watchdog has no power to intervene in ring- fencis ing cases unless the banks themselves ask it to because they judge a plan to pose a possible risk.

the Mail understands Barclays considers its arrangement to be financially sound and did not ask TPR for extra guidance.

the regulator could decide to step in at a later date after the change has been made – although critics warned this only likely to happen when disaster has struck and it is already too late.

sir steve Webb, a former pensions minister who is policy director at royal London, said: ‘instinctively, this feels wrong.

‘it would be incredibly difficult to unpick later on, and the last thing you want is for the regulator to have to pick up the pieces after things have gone wrong. as a member of a pension scheme you want to know your employer will be there in 50 years’ time.’

several retired senior bankers have attacked the change.

andrew Fox, the 70-year-old former head of industrial economics at Barclays, said the move is ‘scandalous’. Peter goshawk, head of the trustees, said that ‘emotionally, it looks odd’ but added the decision makes sense for savers. Barclays has agreed with the trustees that if the investment bank runs into any problems in the next seven years, the pension scheme will be kept afloat by the retail arm.

the lender has also pledged to keep £9bn of reserves on stand-by to plug gaps in a crisis. and it is closing the pension gap by 2025.

sources said it would have been expensive and time-consuming to put the scheme into the ringfenced bank, and added the investment division is well-funded and does not take any unnecessary risks.

it is understood that only 16 pensioners complained about the proposals during a consultation over the summer.

a spokesman for TPR said: ‘We are aware of this plan and have discussed it with Barclays and the scheme’s trustees.

‘However we will not be commenting further on this particular case unless it becomes appropriate to do so.’

Barclays and the bank’s pension trustees declined to comment.

the bank’s shares rose 2pc, or 3.86p, to 199.4p.