The second part of the Union’s landmark legal case on Guaranteed Minimum Pensions (GMPs) will begin in the High Court later this year.
Members will recall the High Court ruled last year that the Trustee of the Lloyds pension schemes is under an obligation to equalise the benefits of male and female members to address the effect of unequal GMPs. The Trustee is currently identifying those members of the schemes whose pensions will be uplifted as a result of our landmark legal victory.
Mr Justice Morgan will be asked to turn his attention to those members who have transferred-out of, or into, one of the Lloyds final salary pension schemes. The Court will be asked to determine who is responsible for paying the unequal GMP benefits: the scheme from which the pension came or the receiving scheme.
The Pensions Bonanza
The surge in transfers-out of final salary pension schemes followed the introduction of greater pension freedoms and the sharp increases in the cash equivalent transfer values on pensions, with some members being offered 50 times the value of their annual pensions. Those values started to fall back in early 2018 as gilt yields rose but research conducted by consultancy XPS, covering 1,800 transfers between June 2018 and March 2019, shows that members who transferred-out of final salary schemes received on average £275,000 in 2019, up from £235,000 in 2018.
In Lloyds thousands of members took advantage of those new freedoms and transferred their pensions out. We estimate that at least £2bn has been transferred out of the Lloyds schemes over the last few years. That will be replicated across all the big final salary pension schemes.
What’s It Worth?
In its simplest form, if a GMP uplift is worth £500 per annum and a pension scheme member was given 50 times his/her annual pension when they left the scheme then this case could be worth £25,000 to that member. Moreover, if you consider that millions of members have left final salary schemes over the last few years then the potential cost of this case for pension schemes up and down the country could run into the hundreds of millions.
The Next Steps
We are aware that a number of members left one of the Lloyds schemes contacted the scheme administrator to ask if they were affected by the GMP case. Those members were told that there was no record of their pension scheme membership. A number of members were subsequently told that their records were automatically deleted once they left the pension scheme. If that’s the case, then it’s important that those members who left one of the Lloyds pension schemes register their details now pending the outcome of the case. There is no guarantee that the Bank has got your details. Members who accrued pension benefits in one the Bank’s final salary pension schemes between 17th May 1990 and 5th April 1997 should complete the form below.
It is important that all staff affected complete that registration form immediately.
Members with any questions can contact the Union’s Bedford Office on 01234 716029 (Choose Option 1).