Lloyds coalition files for GMP equalisation ruling in High Court

Lloyds Bank has launched a joint legal bid with its pension trustees and unions to equalise guaranteed minimum pensions (GMPs) in a move which could cost the industry £20bn.
The coalition is seeking to close an estimated £2,000 per year gap between men and women in the bank's three defined benefit (DB) schemes. This affects approximately 230,000 women who joined the schemes between 1978 and 1997 and substituted their state pension for a higher private pension.
At the time, GMPs were calculated based on women receiving their state pension five years earlier than men, at age 60.
The claim, if successful, could cost Lloyds up to £508m, but consequently land the wider contracted-out DB sector with a £20bn bill.
The action was mooted by the Lloyds Trade Union last August, but now the union, trustees and bank have announced paperwork for the case which has been jointly filed with the High Court, with a trial expected later this year.
They are filing a ‘part 8 claim' to get a definitive ruling on whether there is an obligation for trustees to adjust benefits to ensure they are equal, if there is a correct method for doing this, and how the trustees should exercise their powers.
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."
The issue has caused headaches for the industry since a 1990 judgement in the European Court of Justice said men and women should have the same retirement date for benefits.
Last year, the Department for Work and Pensions (DWP) proposed a method for GMP equalisation where a scheme does a one-off calculation to find whether a man or woman has the higher benefit, with the lower benefits then uprated. That GMP is then converted into an ordinary scheme benefit.
More on Law and Regulation
Is mediation set to become the new normal for pension disputes?
Mediation has been under-utilised historically as a means of dispute resolution in this area. Mark Blyth and Geoff Egerton think this is going to change.
TPR response to funding code consultation reveals level of industry concern over twin-track regime
The Pensions Regulator (TPR) has published the interim response to its first defined benefit (DB) funding code consultation – highlighting the depth of industry concern around its proposed twin-track regime.
DWP sets de-minimis for flat-fee AE charges and launches work to standardise cost reporting
The Department for Work and Pensions (DWP) will ban the charging of flat fees on AE auto-enrolment (AE) pots below £100 and launch work on how to standardise cost and charges reporting.
2021 outlook: What's next for regulation?
After a year that took everyone by surprise, experts tell Professional Pensions what could be on the horizon for regulation in 2021.
TPR bans corporate trustee and its director for 'serious' failings
The Pensions Regulator (TPR) has banned a corporate trustee and one of its directors from acting as pension scheme trustees after multiple governance failures highlighted a lack of competence, capability and integrity.