Given what we know about the performance of Willis Towers Watson (WTW), who administer the Lloyds defined benefit pension schemes, would you trust it to calculate your early retirement pension and commutation lump sum correctly? We’ve been contacted by members whose early retirement quotes have changed significantly but WTW refuses to tell them how it calculates the figures.
The Trustee has also refused to provide members with details of how the figures are calculated.
That’s unacceptable; what have they got to hide?
Updated Calculation Methodology
In August 2025, the Trustee and WTW changed the methodology for calculating early retirement pensions and associated commutation lump sums for pension scheme members. In an email to members, WTW said:
“Because the new basis is members specific, individual members may be better or worse off compared to the old basis depending on a number of factors”. The factors referred to included: age, how long ago the member left the Scheme, the proportion of their benefit that is GMP.
However, WTW and the Trustee refuses to provide members with the basis of the calculations. It seems that members must accept the figures on trust. We are aware that a number of members who questioned why their ‘new’ figures differed from the ones they’d been given previously had the original figures reinstated. That doesn’t fill you with a lot of confidence.
Whilst it’s true that scheme members don’t have the right to take their pensions early, many thousands do every year. Equally, we understand the Trustee is legally required to pay members the benefits to which they are entitled. However, members have the right to know how their pension and lump sums have been calculated.
Why are WTW and Trustee determined the keep the calculations secret? Is it because they don’t want members questioning the calculations? It feels like something is not quite right.
The Trustee recently turned down a member’s stage 2 Internal Dispute Resolution Procedure claiming, amongst other things, that it’s not legally required to share material that is confidential professional guidance. The calculations for early retirement pensions fall into the category of professional guidance.
WTW – It’s Got Form
WTW recently admitted that it miscalculated the pensions and lump sum payments for pensioners. In a letter to one member, WTW said: “As you left the Scheme after your Normal Retirement Date (NRD) but did not draw your pension, when you chose to transfer your benefits they were uplifted using a late retirement factor. It has been identified that the late retirement factor used in our calculation was incorrect, resulting in a higher transfer value than your correct entitlement.”. That mistake was made 5 years ago and WTW is now demanding the money back.
In a letter to the Chairman of the Trustee Board, we said:
“You will be aware that Willis Towers Watson (WTW), who administer the pension schemes on behalf of the Trustee, have written threatening letters to members of the Lloyds Bank Pension Scheme No 1 demanding they pay back overpaid pensions and lump sums. In most cases those overpayments were made 5 years ago.
WTW has admitted that it used an incorrect late retirement factor when calculating pension entitlements and that resulted in some members getting higher transfer values and pensions.
That error was made by WTW and it should be responsible for consequences of the mistake it made. To put it bluntly, WTW had one job: calculate pensions and transfer values correctly. It failed to do that and it’s now hounding retired members of staff to pay back money it overpaid.
We understand the Trustee is under an obligation to recover payments that have been made incorrectly. However, that doesn’t mean those payments must be made by members of the scheme who had every right to expect that their pension and lump sum payments would be calculated correctly. WTW should be required to pay for its mistake and it should foot the bill for the overpayments.
I’m sure you will understand that members have been shocked to receive letters from WTW especially after so long. In one case a member who retired on ill health grounds with an aggressive form of breast cancer received a letter saying she had to pay back £59,000 because her transfer value had been miscalculated by WTW. She used her small lump sum from Lloyds to purchase an annuity and pay for private medical insurance whilst she battled cancer. She’s distraught and worried that the Trustee is going to take her house. That’s just one example of the misery suffered by members of the Lloyds pension scheme because of the actions of WTW.
It’s also the case that members are having to get involved in lengthy correspondence with WTW to receive any form of compensation for the distress and inconvenience caused by its actions. That’s unacceptable. Everyone who has received a letter demanding money back should get a one-off payment of £2500 paid by WTW.
The Trustee Board can’t be bystanders whilst this shambles unfolds.”
Not surprisingly, we’ve had no response from Mr. Baines.
What this shows is that WTW can’t be trusted to calculate pension and commutation lump sums without explaining its calculations. Members have the right to know how their pensions have been calculated. It’s that simple.
We will be returning to this issue again in our next Newsletter.
MEMBERS SHOULD PASS THIS NEWSLETTER ON TO THEIR COLLEAGUES IN HALIFAX & LLOYDS SO THEY TOO CAN BENEFIT FROM THE ONLY INDEPENDENT TRADE UNION IN LLOYDS BANKING GROUP.