HBOS set to eliminate deficit

Halifax Bank of Scotland (HBOS) pledged to wipe out the £1.8bn (€2.7bn) deficit on its final salary pension schemes today.

The announcement came as HBOS said it was on track to better market expectations for the year, following strong cost controls and “measured” growth in its UK banking divisions.

HBOS said it would make a substantial initial contribution to its pensions schemes next year, even though it said the deficit was currently “very manageable for a company of our size”.

The group has around 36,000 members across its main final salary schemes - Halifax, Bank of Scotland, Clerical Medical and Birmingham Midshires. The plan to eliminate the deficit will not require any extra contributions from the pension-fund members.