A landmark legal case on the equalisation of guaranteed minimum pensions (GMPs) has now been lodged with the High Court affecting 270,000 women working at Lloyds Bank.
Lloyds Trade Union and the Lloyds Banking Group Pensions Trustee Limited are bringing the case jointly.
Three representatives of the Lloyds Bank Pension Scheme No 1, Lloyds Bank Pension Scheme No 2 and HBoS final salary pension scheme have been joined to the proceedings to argue the case that benefits must be equalised on the basis most favourable to members.
The case is expected to be heard by the High Court next year..
The case concerns the industry-wide issue which relates to a part of the Schemes’ benefits (called Guaranteed Minimum Pensions) which, as a result of statutory rules, is calculated differently for men and women.
The pensions, in particular the guaranteed minimum pensions (GMPs), of female members of staff increase at a lower rate than the pensions of male pension scheme members.
Mark Brown, general secretary of the Lloyds Trade Union, said: "There are some 270,000 members of the three pension pchemes covered by this case. The majority of scheme members are female and the issues raised in the Lloyds Trade Union affect approximately 230,000 people."
However, the guaranteed minimum pensions equalisation issue is much bigger than just Lloyds Banking Group, affecting some 2,400 ‘contracted out’ private sector pension schemes with some five million female members.
Many of those females will receive pension increases at lower rates than their male colleagues and they too could benefit from the outcome of this case.
As part of the claim to the High Court, the trustee has commissioned some high level work on the costs of equalising benefits.
There are various methodologies that can be used to equalise the benefits and that is one of the issues being put to the court.
That said, the cost of equalising benefits in Lloyds Banking Group could be up to £508m, which is very similar to the figure produced by the union’s actuarial advisers.
Commenting on the case, a Lloyds Banking Group spokesperson, said: "‘This relates to a longstanding industry-wide issue about how differences between equality and pensions legislation impact occupational pension schemes.
"The group supports the trustee in seeking a resolution so that it can bring an end to decades of uncertainty and provide clarity to interested parties."
A spokesperson for the Lloyds Banking Group pension schemes said: "The trustee is seeking directions from the court in relation to two broad questions: Is the Trustee required to equalise its schemes for the effect of GMPs; and If so, how should such equalisation be achieved?
"For a number of years, UK pension schemes have been grappling with the issue of whether, and if so how, scheme benefits should be equalised for the effect of unequal GMPs. The proceedings are therefore likely to be of significant interest to all occupational pension schemes who were contracted out of SERPS between 17 May 1990 and 6 April 1997.
"It is too early to speculate what the cost and benefit implications might be for Lloyds Banking Group pension schemes as the outcome is entirely dependent on the findings of the High Court and the matter is not expected to be heard by the High Court until 2018."
The cost of equalising pensions across the 2,400 ‘contracted out’ defined pension schemes across UK business could be up to £20bn.
stephanie.hawthorne@ft.com
