Members may have seen reports of the recent Lloyds Bank case. The court ruled that pension schemes will have to increase benefits for certain members, so as to eliminate inequalities between men and women attributable to guaranteed minimum pensions (GMPs). This process is called “GMP equalisation”.
The GMP is a slice of benefit which schemes must by law provide, if (as was the case with the Funds) they were “contracted out” of the old State earnings-related pension scheme.
The Lloyds Bank ruling may affect you if you were in pensionable service between May 1990 and April 1997 – we refer to people in this category as “1990-97 members”. Based on the ruling, the Funds will need to carry out a GMP equalisation exercise for 1990-97 members. This is likely to mean that some, but not all, 1990-97 members will see a small increase in their benefits. No members will see a reduction.
Like many other pension schemes around the UK, the Funds are now working with their advisers to determine how they will carry out GMP equalisation. The process is complex and may be affected by future developments – for example, further court proceedings (including any appeal of the Lloyds Bank ruling) or guidance or legislation from the Government. Accordingly it is likely be several months at least before we are in a position to start.
There is no need for any member to take action as a result of the Lloyds Bank ruling. Any 1990-97 members who are entitled to an increase in benefits will be notified in due course, although as we say this could take several months; please check the website for updates. If you were not in pensionable service between May 1990 and April 1997, then you are not affected.