Bank of England staff furious over Andrew Bailey’s plans to cut generous pension payouts
GOVERNOR Andrew Bailey is causing unrest among Bank of England staff over plans to cut generous pension payouts.
The Sun can reveal talks are already under way with Unite, the Bank’s union, after workers expressed dismay at the shake-up.
However, Mr Bailey is said to have spearheaded the move to cut costs amid growing scrutiny about the gap between generous public sector pension awards and the private sector.
The Bank has had three different pension rates for staff since 2015.
Currently the levels are either 1/50, 1/65 or 1/95.
This would mean someone on £40,000 a year salary on a 1/95 accrual rate would add £421 to their pension pot each year while someone on 1/50 gets £800.
However, the Governor’s pension review wants to smooth out these differences to 1/80 which would get them £500 based on the above example.
John Ralfe, an independent pension expert, said it would mean other public sector workers would be on a pension that was “twice as generous”.
However, the Bank’s retirement age is 65, while most public sector contracts now have retirement at 67.
Mr Ralfe added: “It will still mean the Bank is not being terribly generous, but it is probably doing the right thing for the taxpayer.”
Public sector workers’ pensions are worth nearly four times those of private sector workers, according to analysis by the TaxPayers’ Alliance.
A Bank of England spokesman said yesterday: “We need to have a pension arrangement in place that is fit for the organisation in the coming years.
“The objective of this review is to ensure our pension arrangement is fair, attractive, sustainable in the long-term and simplified for all our employees.
“We are already in discussions with the Union and will launch a statutory consultation process with employees in the autumn.”
The Bank employs 5,392 people while the total cost of its pension promises is £3.3billion, according to its recent annual report.
The average Bank employee earns £70,937.
Mr Bailey declined a pay increase this year — but still received £598,179, including £99,000 in lieu of pension, according to the annual report.
NO BAILOUT NEED
THE UK’s biggest high street banks would not need a taxpayer bailout if they were to collapse, a review suggests.
The Bank of England found that eight major lenders could safely manage a failure without a big knock-on effect for the UK economy.
Shareholders and investors would instead bear the brunt, it said.
However Standard Chartered was ordered to improve its crisis-planning after “shortcomings”.
Reforms came in after the global financial crash of 2008, when RBS and Lloyds were bailed out while Northern Rock was nationalised.
A WRONG MOVE
RIGHTMOVE was last night under pressure after revealing talks with a big lettings group had broken down.
Openrent, which has thousands of landlords, will no longer advertise rental properties on Rightmove after “conditions could not be agreed”.
Rightmove shares fell by 4.34 per cent to 524.20p.
OpenRent accounted for 8 per cent of its rental listings last month.
It means Rightmove’s membership will decline by about 3 per cent this year compared with last year.
Panmure Gordon suggested it would cost Rightmove £4million in revenues next year.
WHY STOCK MARKETS CRASHED
WHAT just happened?
On Monday, global stock markets suffered one of their worst sell-offs in years.
Japan’s Nikkei had its biggest drop since 1987’s Black Monday.
More than £40billion was wiped off London’s FTSE 100 and US tech giants lost hundreds of billions in value.
Why did markets fall?
Three factors: There were sudden fears the US could be headed for a recession.
Weak jobs figures suggested companies were making cutbacks.
Traders reckon the Federal Reserve has left it too late to cut rates.
Secondly, tech giants are being pressed by investors about hefty spending on AI.
There is a growing risk their value “bubble” may burst. Influential investor Warren Buffett also dumped half his stake in Apple, leading others to follow.
Thirdly, investors who had been using a weak Japanese currency as a cushion against other trades were caught out by a sudden rise in the Yen.
What happened next?
There were early hopes for a “turnaround Tuesday” after Japan’s Nikkei bounced back.
This gave rise to the idea the market rout had been overdone.
But then Europe and London’s stock markets struggled to cling on to early gains.
What does it mean for Brits?
Bizarrely, it pushed up the price of UK government bonds as they are safer assets.
This has lowered the yield, which banks use to price mortgages.
So lenders should start cutting home loan rates.
OZ WINE SELLERS
BUDGET-friendly wine brands Blossom Hill and Wolf Blass are being offloaded by Treasury Wine Estates.
The Aussie firm plans to sell its “commercial” offerings, which include Lindeman’s, by the end of this year to focus its cellar on more premium brands, such as 19 Crimes.
Treasury recently ruled itself out of the auction for English sparkling wine brand Chapel Down, which put itself up for sale to pay for more vineyards.
HOLIDAY INN owner IHG confirmed its UK hotel prices had risen by another 2.5 per cent in the first half of the year.
The hotel giant posted a 4 per cent rise in half-year global revenues to £1.8billion.
So far this year it has opened two new hotels a day.
DOMINO’S FREEBIES GAMBLE
DOMINO’S is offering a “free pizza” loyalty programme and more discounts to tempt cash-squeezed consumers.
Andrew Rennie, chief executive of the pizza delivery company, said 630,000 randomly selected customers will be included in a trial that will see them receive a free large pizza after five orders.
Domino’s reported that orders finally returned to growth in the second quarter, after two years of customers cutting back on deliveries.
Mr Rennie said the business was working on passing the benefit of eased inflation to franchisees so they can invest more in customer discounts.
As a result, Domino’s said underlying profits will be at the lower end of expectations of between £144million and £149million.
Shares dropped by 7.1 per cent to 287p.
Domino’s made 20 pizzas a second during the football Euros, but Mr Rennie said June was relatively quiet outside of England’s matches.