- Scheme benefits
High Court judgment about equalising pensions
Jocelyn Blackwell explains the next steps following the Court judgment
What does the GMP judgment mean for members?
The courts have decided that GMPs have to be equalised, so what we’ll look at is the members of No.1 and No.2 and HBOS schemes. Possibly up to 100,000 members will be affected, but we are still working on that to establish what exactly is going to be done.
Will the value of members’ pension go up or down?
The value of members’ pensions won’t go down, but it’s unlikely that it will go up by an awful lot of money, so over a total retirement it is unlikely to be more than £500.
How many members are affected?
We don’t yet know to be honest; because of the way that the judgment comes out we’ve got to work out who’s affected, so possibly maybe half the members will be affected, and a lot of people will see very little change in their pensions.
Where can I find out more?
The website primarily, we have a lot of information on the website. We’ve got frequently asked questions; we’ve got some example cases so people can compare the situations they are in with what’s on the website. We are also going to be doing a newsletter and for those who are affected, we will write to them personally once we know what the outcome is, but there is nothing really that members need to do right now.
Are any other schemes affected?
An awful lot of UK pension schemes were contracted out of the State Earnings Related Pension Scheme so they do have GMPs so they will be affected like the Lloyds schemes, so they’ll be following the case and have been closely to see how it will affect their members.
Jocelyn Blackwell discusses the Court judgment with members
- Andrew Dommett – Deferred member (AD)
- Jocelyn Blackwell – Trustee Director (JB)
- Nicky Cornelius – Pensioner (NC)
AD: "What does it mean if I have a guaranteed minimum pension?"
JB: "The GMP part of your pension for most people is a very small part of their overall pension, so it’s only that part of the pension that we are looking at in the court case."
AD: "Which members could have a guaranteed minimum pension?"
JB: "Contracting out lasted from the 6th April 1978 to the 6th April 1997. Those members who are contracted out for the period of 17th May 1990 until 6th May 1997 might be affected, but it won’t be everybody."
NC: "So how will I find out if I am affected?"
JB: "It will take some time but we will write to everybody when we know who’s personally going to be affected."
NC: "Is it possible that my pension will go down following the ruling?"
JB: "No, the value of your pension will not go down as a result of the ruling."
AD: "How much money could affected members get from this?"
JB: "It’s unlikely to be a great deal and it won’t affect all members anyway. The calculations that we’ve seen so far suggest that it would be a maximum of £500 spread over a retirement."
AD: "So what should members do next?"
JB: "There is no need for members to do anything. Those that are affected, we will write to them personally. We’ll put information on the website. There are frequently asked questions there already - we’ll keep those updated. We’ve got some examples so you can compare your situation to those examples to see how that may affect you and we will write a newsletter in the spring time."
The Court judgment has been announced
There are still some aspects of the Court’s judgment where further clarification is needed. The parties involved in the hearing are seeking this additional clarity, which will help inform how the Court’s decision is implemented. The guidance that is currently being sought relates to the extent of the Trustee's obligation to revisit past transfers out of the Schemes.
A Court hearing on the question of past transfers-out has been scheduled for the end of April/beginning of May 2020. As this relates to past transfers-out it is unlikely to affect existing members of the Schemes and will not delay the implementation of the Court’s main decision.
For more information about GMPs and the judgment please see our FAQs.
The Court decision means some members could get more pension
In July 2018, the High Court held a hearing on an issue to do with ‘Guaranteed Minimum Pensions’ (GMPs). For members who have a GMP, it is often only a small part of their overall pension. In October 2018, the Court published its judgment. It has decided that we need to equalise how GMPs are treated. As a result, some members could get more pension.
The value of your pension won’t be reduced as a result of the Court’s decision.
Increases are likely to be small and take some time to happen
The only schemes affected by the Court’s decision are Lloyds Bank Pension Schemes No.1 and No.2 and HBOS Final Salary Pension Scheme. Initial analysis suggests that of all the members in these schemes, around half are not affected at all by the decision. That’s because they didn’t build up a GMP between 17 May 1990 and 6 April 1997.
It’s possible that many of the remaining members will receive no increase, because there’s no overall disadvantage to them from the way their GMP was treated. Initial analysis suggests that for the majority of people who are due an increase it’s likely to be less than £500 over the course of their retirement, which could be over 30 years.
Calculating and implementing the adjustments to members’ pensions will be complicated and will take a considerable amount of time. At this point, we don’t know how long it will take, but we will do it as quickly as we can, while making sure we get it right.
We will keep this website updated with the latest information as the situation and timing becomes clearer. When we know exactly which members will get an increase, and how much, we will make the necessary adjustments and write to them personally to let them know.
When were you employed and building up benefits in our scheme?
For more information about whether you're likely to get an increase, see our FAQs.
We're here to give you the facts
As your Trustee Board we represent the interests of all members and are here to help make sure you’re treated fairly.
There are still some aspects of the Court’s judgment where further clarification from the Court is needed. The parties involved in the hearing are working towards getting that additional clarity which will help inform how the Court’s decision is implemented.
How four typical members might be affected
Richard is 42 and joined the Lloyds Bank Pension Scheme No.2 in September 1997. As GMPs stopped building up after 6 April 1997, Richard has no GMP. So he isn’t affected by the Court’s decision.
Susana is 54. She joined the Bank of Scotland (1976) Pension Scheme in 1994 and built up a GMP between 1994 and 1997. We'll work out whether Susana is affected and if she is we'll make the necessary adjustments and write to let her know. Any increase Susana gets will only make a difference to her when she takes her pension or transfers out of the Scheme. The Trustee hopes to be in a position to start communicating with individual members in the summer of 2020.
Roberto is 70. He joined the Lloyds Bank Pension Scheme No.2 in 1985. He started taking his pension in 2013, so he has some GMP, and it forms a small part of the pension he's getting. We'll work out whether Roberto is affected. If he is, we'll make the necessary adjustments and write to let him know. The Trustee hopes to be in a position to start paying increases to pensions in payment where they are needed from the summer of 2020 onwards.
Shona is 46 and was a member of the Lloyds Bank Pension Scheme No.1 in 1996, and built up some GMP. When she left her job at Lloyds, she decided to transfer her benefits, including her GMP entitlement, to her new employer's scheme. Shona could be affected by the Court’s decision, because her new scheme or the Lloyds Bank Pension Scheme No.1 might have to give her a bit more pension.
Guidance from the Court on the extent of the Trustee's obligation to revisit past transfers-out is currently being sought by the parties involved in the hearing. A further hearing on the question of past transfers-out has been scheduled for the end of April/beginning of May 2020. We will update the information on our website once we know more.
Questions and answers
For answers to common questions about GMPs and the Court judgement, see the questions and answers on our FAQs page. We'll be updating these Q&As regularly to reflect feedback we get from members, so if you have any questions this is the best place to look.