Barclays’ U.K. Retirement Fund in Poole, England, had an estimated £9.5 billion ($15.5 billion) in assets under management, according to the 2008 Pension Funds and their advisors. As of September 30, the fund had a deficit of £2.2 billion compared to a surplus of £200 million the previous year.
“This position is likely to have worsened” since the 2008 valuation, according to the letter.
Under the proposal, accruals for employees of BGI and Barclays Capital would go to Barclays Pension Investment Plan, while accruals for employees of Barclays’ retail banking, Barclays Commercial Bank, Barclaycard or Barclays Wealth divisions would go to the company’s Afterwork DC plan. Asset sizes for both DC plans could not be immediately learned.
“Volatility in stock markets and interest rates causes the capital and cost requirements of the pension fund to be extremely volatile,” Varley said in the letter. “Allowing the current position to remain unchanged … is untenable.”
The DB fund had been closed to new members since 1997.
Under U.K. law, corporate plan officials must consult with their employees or employee representatives when considering major changes to pension plans.
The consultation period at Barclays will end in August, and a decision is expected soon after that, according to a company spokeswoman.