The Financial Times, commenting on our landmark High Court case, said: “Hundreds of thousands of former members of final salary pension schemes are now in line for a financial boost following a landmark High Court ruling on historical gender discrimination.”
The key points from the judgement are:
- The Trustee of the Lloyds pension schemes owes a duty to a transferring member to pay a statutory cash equivalent transfer value (CETV) which was correctly calculated, reflecting the member’s right to equalised guaranteed minimum pension benefits.
- Trustees in all pension schemes are on the hook to pay a top-up to the receiving scheme together with interest. Any claim by a transferring member is not time barred, either under the Scheme’s rules or under the relevant legislation.
Who Will Benefit From This Judgement?
One of the problems is going to be constructing the records for those members who have transferred out of the Lloyds defined benefit pension schemes. In many cases, the records held by the Trustee have been deleted. The best estimate is that 30,000 members have transferred out of the Lloyds schemes since 1990. Members will recall that 17th May 1990 is when the Barber Judgement on equalising pension ages for men and women was handed down by the European Court Of Justice.
The Union’s actuarial adviser has estimated that more than half of the 30,000 members who have left one of the Lloyds schemes will be affected by unequal guaranteed minimum pensions. And half of those, will need top-up payments. Willis Towers Watson were asked to give an indication of the likely estimation of the equalisation top-up payments for transfers based on a representative sample of scheme members. Of the 270 transfers out looked at by Willis Towers Watson, 147 needed to be topped-up. The average top-up payment was £3,900, with the largest payment being £23,000, or 2.4% of the original transfer value payment.
In his judgement, Justice Morgan said: “…all that I can usefully say is that the Trustee does need to be proactive in that it must consider the rights and obligations which I have identified, the remedies available to members and the absence of a time bar and then determine what to do” [paragraph 276, page 81]
The Next Steps?
Members don’t need to do anything at the moment. Once we have consulted further with our legal advisers, we will write to members again in the New Year. The aim will be to produce an online pro-forma for members to complete. We will then send member details to the Trustee.
The process required to determine top-up payments for thousands of members going back to 1990 is not going to be straightforward and getting compensation is going to be a marathon and not a sprint.
In meantime, we would advise members who have transferred out of one of the Lloyds schemes to get all their paperwork together in one place.
If you know of any colleagues who might benefit from this judgment, please forward them a copy of this Newsletter. They should be encouraged to register their names and details here and we will contact them directly.
Members with any questions should contact the Union’s Advice Team on 01234 262868 (choose Option 1).