Page last updated at 14:25 GMT, Tuesday, 16 September 2008 15:25 UK

Lehman pension scheme in deficit

Lehman Brothers UK staff packing up
Lehman's UK staff have been collecting their possessions

As Lehman Brothers' UK unit goes into administration, 4,020 current and former staff have been told their final salary pension scheme is in deficit.

This fact was acknowledged at a news conference held by administrators PwC.

"We're informed that the defined pension scheme is in deficit. It is an unsecured claim," said PwC administrator Tony Lomas.

So as well as imminent unemployment, thousands of staff in the UK will have lost some of their expected pensions.

Protection scheme

The insolvency of the bank and the deficit in the scheme, means that the scheme, which has assets of 180m, will soon be a claim on the Pension Protection Fund.

This guarantees to pay 100% of someone's pension if they have reached their scheme's retirement age at the time their employer went bust, and pays the same for those receiving an ill-health or dependents pension.

Those below the retirement age will get only 90% of their accrued pensions.

This is capped at 27,770.72 a year for those who have yet to retire and for those who have retired early.

The Lehman final salary scheme closed to new joiners in May 1999.

Staff joining since then have been paying into a money purchase scheme which, by definition, cannot go bust.

The final salary scheme has 1,500 active members, 120 pensioners, and 2,400 deferred pensioners - those who had left the bank but had yet to take their pensions.

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