STATE-OWNED Anglo Irish Bank has told 200 former staff and a further 30 current employees that it plans to stop making cost of living increases to members of its defined-benefit pension scheme.

The bank has taken the decision following approval from former minister for finance Brian Lenihan in an attempt to reduce costs and address the deficit in the scheme.

The plan to stop inflationary increases to retired Anglo staff on pensions means any cost of living increases will now be made only at the discretion of the members.

The move will affect only members of the scheme who have reached retirement age, although those on deferred pensions will be affected when they start drawing on the bank’s pension scheme.

The vast majority of Anglo’s 1,300 workforce is on the bank’s defined-contribution pension scheme, which was introduced in 1994 when it closed the defined-benefit pension scheme.

The changes affect many former senior executives and staff who worked at Anglo during Seán FitzPatrick’s years as chief executive. A spokeswoman for Anglo had no comment on the changes.

The bank has opened a 30-day consultation period to negotiate with staff affected by the move.

Anglo operates two defined-benefit pension schemes.

They showed a deficit of €9 million at June 2010, according to the bank’s most recent accounts, compared with a surplus of €7 million six months earlier.

The deficit is relatively small compared with the defined-benefit schemes of many other public companies.

The schemes will remain in place following the merger of the bank with Irish Nationwide Building Society and the gradual wind-down of the enlarged lender.