Select committee questions TPR on Barclays scheme sponsorship

Barclays Bank plans to split into two entities to comply with banking legislation. Barclays Bank plc will comprise the investment bank and international banking division, while new entity Barclays Bank UK plc will comprise the ringfenced UK banking operation, which will include the UK retail bank.

As highlighted in a recent letter to the Pensions Regulator's chair Lesley Titcomb, from committee chair Frank Field, the trustees of the scheme have agreed that sponsoring will “remain” with Barclays Bank.

However, this means that after the restructuring, responsibility for supporting the scheme, which has a £7.9bn deficit, will be assigned to the riskier investment bank, despite most members having been employed in Barclays’ core UK retail banking business.  

The trustees agreed to this proposal in return for the promise of dedicated access to a collateral pool of assets worth up to £9bn.

The committee has asked the pensions watchdog whether it examined the proposed arrangements for the post-restructuring sponsorship of the Barclays UK Retirement Fund, and whether the trustees consulted with the regulator prior to agreeing to the proposal.

It has asked for the regulator’s view on the proposal’s impact on the strength of the covenant, on the robustness of the pledge of collateral assets, and whether it is content that the pensions of UK retail banking employees should be underwritten by a non-ringfenced global investment bank.

Chair of the committee Frank Field said: “The whole point of splitting banks in two is to protect the safe retail bank that can’t be allowed to fail from the casino bank that can go bust come the next crash. I am struggling to fathom how being shackled to the expendable half provides long-term reassurance to the pension scheme members.”

A spokesperson for the Pensions Regulator said: “We are aware of this planand have discussed it with Barclays and the scheme’s trustees. Barclays has not made a clearance application nor have we approved the bank’s plans.

"We continue to work closely with the trustees and assess the impact on the scheme. As clearance has not been provided, all of our powers (including our anti-avoidance powers) remain available to us. We would not hesitate to use our powers if necessary.”