On the go: Lloyds Banking Group has made £1.3bn in deficit contributions to its three main defined benefit pension schemes.
This includes an additional contribution of £500mn greater than the subsidy made in the equivalent period in 2021.
The payments, made during the first three months of the year, come off the back of a “strong capital build-up” across the quarter, according to a market update.
The group’s fixed contributions for the year value at £800mn and have already been paid in full.
The variable contributions of £500mn represent around half of the agreed variable pension contributions, relating to 30 per cent of the 2021 final dividend and share buyback, following the current agreement with the trustees.
A total of £400mn in contributions was made during the first quarter of 2021.
The group described this as an “efficient utilisation of capital build in the first quarter, while not altering the total contributions to be paid during the year, nor the expected impact on the full-year capital position following the payment of the remaining variable pension contributions”.
“In the first three months of 2022, we delivered solid financial performance, with strong income growth and capital build. These results demonstrate the consistent strength of our business model,” group chief executive Charlie Nunn said.
Lloyds Banking Group has a number of DB pension schemes in the UK — the three most significant being the main sections of the Lloyds Bank Pension Scheme No 1, the Lloyds Bank Pension Scheme No 2, and the HBOS Final Salary Pension Scheme.
As of December 31 2021, these schemes represented 94 per cent of the group’s total gross DB pension assets, according to the group’s 2021 annual report.
The most recent triennial funding valuations of the three main DB pension schemes showed an aggregate ongoing funding deficit of £7.3bn as of December 31 2019, representing a funding level of 85.7 per cent.
