The case is going as we expected and there have been no surprises. Many members have asked why the Department of Work and Pension (DWP) and HM Treasury (HMT) are involved in the case.
The Government applied, very late in the day, to intervene in the proceedings. They were given permission to do so by the Court on 25 May.
Intervention by the DWP was always to be expected – the only surprise is that they took so long to make their application. It consulted the pensions community on methods of equalisation in 2012, and proposed a method which is quite similar to the Union’s preferred method. The consultation was met with horror. The proposal was withdrawn and replaced in 2016 with another, easier, method which achieves overall actuarial equivalence between the sexes. It is what has been labelled as one of the variants of method D in these proceedings (we will set out the varies methods of equalisation in our next email). The pensions industry was happy with it; but it does not achieve equality in every case, and neither we nor the Banks support it. The DWP wants to speak in its defence, if only so that it can be seen to have done so.
The Treasury’s application was unexpected. Whatever policy-based reasons it offered (which were very thin) it is clear that its real interest is as the paymaster of the public service pension schemes such as the civil service, NHS, teachers, local government etc. They provide benefits which are nearly equalised for GMP inequality, but not quite.
The Treasury’s main concern is that the Court does not reach a conclusion that there is only one proper method of equalising, and that one method rules out what it has been doing since the mid-1970s. All of the other parties have said that we are not concerned to find out if the Treasury’s method is correct or not: we just want to find out about the methods which we, the Banks and the Trustee believe might be correct.
The DWP’s and the Treasury’s stated position is therefore that they do not want the Court to rule anything out and want it to stop at saying which of the methods the parties have put forward are lawful, whilst leaving open the possibility that there may be some others as well. We suspect that the court will try to avoid straying into public sector territory, but if you cut to the core of the issue, we say that there is in fact only one correct method, and it is not the Treasury’s.
The Government has always been a strong advocate of the position that pension schemes must equalise for the effects of GMPs, and on that question at least it supports the Union’s position.