Fight for a better TSB deal

The Hill Samuel Action Group will this week send out a circular to pensioners of the now defunct merchant bank, urging them to fight for an improved pensions deal out of the TSB pension scheme.

HSAG, organised by former director Billy James, hopes to rally support from some 600 current and deferred pensioners. As reported in last week's Independent on Sunday, HSAG wants to lobby MPs ahead of the passing of the Lloyds TSB Bill.

Mr James said the action was not confined to former Hill Samuel employees. "We want to broaden the group to include all members of the TSB scheme."

The TSB pension scheme is hugely overfunded, and has been on a contributions holiday for many years. It is believed the Hill Samuel element is overfunded to the tune of pounds 200m.

Any parliamentary activity comes as the debate over pensions has reached a critical stage. As well as Labour's commitment to reform the welfare state, where pension funding will be a key part of any proposals, the subject is also of intense interest in the wake of the Maxwell scandal and, more recently, the pounds 4bn pensions mis-selling affair.

HSAG is demanding two undertakings from Lloyds TSB: that "our right to the pension fund surplus must be guaranteed," and that "the surplus be available to improve the benefits of members and deferred members". It wants to see pensions for all members fully index-linked, while older pensioners on relatively low incomes should be granted a better deal.

The circular points to a fundamental inconsistency in TSB's approach to entitlements. John Elbourne, TSB's deputy chief executive, was granted a pounds 470,000 top-up to his pension fund. Hugh Freedberg, Hill Samuel's former chief executive, was given a pounds 650,000 pension payoff. Sir Nicholas Goodison, Lloyds TSB deputy chairman, has a special arrangement to provide a full pension, although he joined TSB only in 1988. Mr James said the one-off payments "seem to be on a random basis, and as such are unfair".

Lloyds TSB has told HSAG it is constrained from making any changes to the pension scheme for several reasons. Changes, it says, would require the approval of the trustees, while certain changes can only occur with the approval of the Inland Revenue.

The group has secured the backing of Sir Robert Clark, the last chairman of Hill Samuel before it was acquired by TSB in 1987. Mr James has also enlisted Lord Keith, who played a pivotal role in the bank's development.