By Tapan Panchal 
 

LONDON--Lloyds Banking Group PLC (LLOY.LN) Tuesday announced changes to its defined benefit pension schemes, and said that the changes would have a one-off benefit of 1 billion pounds ($1.68 billion) to its income statement.

The British retail bank will recognize the benefits from pension scheme changes in the second quarter outside of underlying profit.

Lloyds said that it has decided to revise the current cap on the increases in pensionable pay, used in calculating the pension benefit, to 0% from 2%, effective April 2. It revised the current cap after consultations with affected employees and unions.

The company said that the effect of changes in pension schemes on its capital position will depend on the funding position of the defined benefit schemes on April 2. It expects the changes to have a positive effect on the group's capital ratios.

Lloyds Banking Group operates six defined benefit pension schemes with active members in the U.K. with total assets of GBP32.6 billion as at Dec. 31, 2013.

Shares on Tuesday closed at 81 pence, valuing the company at GBP57.81 billion.

-Write to Tapan Panchal at tapan.panchal@wsj.com

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