The funding level of HBOS’ pension scheme has improved by £1.2bn (€1.3bn) since June after the UK bank changed the way in which it calculates the fund’s liabilities. The change means the scheme is now in surplus to the tune of £477m, while its new parent Lloyds TSB’s retirement fund has tripled its deficit to almost £2bn.

According to HBOS' annual results released today, discount rates used last year, which measure liabilities against AA corporate bond yields, were higher than those previously used by the bank meaning that the scheme was able to report a positive funding level despite a fall in asset values.