Lloyds and Standard Life Aberdeen (SLA) are in a stand-off over a £109billion pension deal that could end up in court.
Investment group SLA is fighting a decision by Lloyds to cancel an agreement in which it looked after money for Scottish Widows, the bank’s pensions division.
Lloyds announced it would tear up the agreement after Standard Life merged with Aberdeen Asset Management last year in an £11billion tie-up.
Standard Life Aberdeen is fighting a decision by Lloyds to cancel an agreement in which it looked after money for Scottish Widows, the bank’s pensions division
SLA, the newly created group, has interests in both pensions and asset management – and Lloyds said this made it a direct competitor, meaning it was free to ditch their deal under the terms of the contract.
But SLA has hit back by saying it is not a competitor, so Lloyds had no right to cancel the agreement.
Pension Buy Out Fear
A boom in pension takeover deals could be putting workers’ retirement at risk, unions have warned.
The Trades Union Congress has hit out at a surge in funds offering to take over management of companies’ pension funds in exchange for a fee.
While this frees employers from what can be a major financial burden, the TUC warned it may leave staff facing an uncertain future.
Insurers have warned that these funds offering to take over the pensions are not subject to the same strict rules as traditional players, meaning that they could be more risky.
The investment firm wants the Widows business back and said the two sides are in discussions, but Lloyds insisted there will be no U-turn.
It sets the stage for a clash which could turn into a breach-of-contract lawsuit if there’s no deal.
An SLA spokesman said last night it does not believe that Lloyds and Scottish Widows ‘has the right to terminate the long-term asset management agreements.’
Losing the Widows business was a blow for SLA, which has been struggling to retain investors.
The portfolio earned it £129million a year, and SLA shares dropped 7.5 per cent when Lloyds decided in February to end the deal.
Lloyds, however, is pressing ahead with finding a different investment firm to manage the £109billion business, with a decision expected to be announced later this year.
A Lloyds spokesman said last night: ‘Standard Life Aberdeen is a clear and material competitor of Scottish Widows and Lloyds Banking Group in the UK, and to suggest otherwise is not credible.
He added the deal to manage the Widows funds was due to end in March 2022.