It’s a complex subject, so bear with me. The issue is about how pensions, in particular Guaranteed Minimum Pensions (GMPs), are increased under the rules of the Bank’s defined benefit (final salary) pension schemes.
The outcome is straightforward. The pensions of female members of the pension schemes increase at a lower rate than the pensions of male members. That is discriminatory on the grounds of sex, or, put another way, women receive less pay than men for doing the same work.
Sex discrimination is unlawful and having taken advice from a leading QC we believe that an Employment Tribunal will conclude that the pensions for female members should be increased at the higher rate that applies to men.The discrimination affects female members who:
- Joined any of the Bank’s final salary pension schemes; and
- Joined one of these schemes before 6 April 1997.
Male members of the Bank of Scotland and Birmingham Midshires Pension Schemes could have similar claims because part of their pensions is not guaranteed to increase at all. The final salary schemes affected are:
- The Lloyds Bank Pension Scheme No 1 (which includes the Scottish Widows Retirement Benefits Scheme and the C&G Final Salary Pension Scheme)
- The Lloyds Bank Pension Scheme No 2.
- The HBOS Final Salary Pension Scheme (which includes the Bank of Scotland 1976 Pension Scheme, the Halifax Retirement Fund, the Equitable Life Pension and Life Assurance Scheme, the Birmingham Midshires Pension Scheme and the Clerical Medical Staff Superannuation Fund).
Members of the Bank’s Your Tomorrow pension schemes are not covered by this action unless they were previously members of one of the Bank’s defined benefit pension schemes.
What’s It Worth?
GMP equalisation affects up to 2,400 pension schemes and millions of women. According to a number of industry bodies it’s going to cost £13bn to clear up the mess.
We think that’s a conservative estimate and the figure, once you take into account all the associated legal and actuarial costs, is closer to £20bn.
TBU’s actuarial adviser has looked at a range of members and estimated that the overall difference in benefits, depending on the calculating method used, could be worth up to £2,000 per female member of staff.
If you multiply that by the number of female members – active, pensioner and deferred – of the Bank’s pension schemes then that equates to nearly £300 million excluding the cost of implementing any pension changes.
The Next Steps
TBU is putting together a class action lawsuit to present to the Employment Tribunal on behalf of female members who are the victims of discrimination. As with the TSB non-signers case, it is important that members assert their legal rights now to protect themselves in future.