Pensions  

Government eyes landmark equal pension rights case

It affects mostly women, but also some men, due to the interaction between the state pension and the company scheme.

Sir Steve said government’s goal has always been to equalise GMPs, but successive governments prioritised auto-enrolment, changes to the state pension, and the introduction of pension freedoms.

He said: “GMP equalisation was seldom at the top of the list. And because it is so complicated, there wasn't actually nobody banging on the door saying ‘you got to do this’.”

The DWP launched a consultation on the issue in 2012, but with a solution considered too expensive by the industry.

Another consultation in 2016 proposed a method of applying equalisation that was broadly welcomed by the industry as an improvement on the more expensive approach from 2012.

However, it wasn’t never transposed to law.

The Lloyd’s case on GMPs has been running since the end of 2016, and will finally have its day in court starting 2 July.

According to Mark Brown, general secretary of the Lloyds Trade Union, there are 255,000 members of three DB plans - Lloyds Bank Pension Scheme No 1 and No 2 and the HBoS final salary pension scheme – which could be affected by the ruling.

One of the proposals put forward by the union's actuaries' will cost the bank around £500m, while another will cost around £100m – this is the one most closely aligned to the government’s proposal set out in the latest consultation.

Mr Brown said: “Obviously we want £500m, and they only want to give £100m.

“The union is one side, the bank is on the other side, and then you got the trustee in the middle, on the sidelines." 

Lloyd’s has declined to comment.

David Penney, chartered financial planner and company director at Penney Ruddy & Winter, amitted GMP equalisation is a very complicated matter.

“No one understands it for a start [...]. It [is a topic that] needs addressing but very few people will actually be aware there is a problem.”

maria.espadinha@ft.com