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GMP equalisation

High Court judgment about equalising pensions

Jocelyn Blackwell explains the next steps following the Court judgment

Read the full transcript

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

Read the full transcript

Attendees:

  • 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

Update on judgement
The Trustee is currently working towards implementing the Court's decision that benefits built up in the Schemes (Lloyds Bank Pension Scheme No.1, Lloyds Bank Pension Scheme No.2 and HBOS Final Salary Pension Scheme) between 17 May 1990 and 6 April 1997 should be equalised to take account of the unequal Guaranteed Minimum Pensions set out in legislation. That implementation work has been ongoing and the Trustee hopes to be in a position to start communicating with individual members in the summer of 2020.

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.
August 16 2019
Update on judgement
‘The High Court has now made its decision and decided that benefits built up in the Schemes (Lloyds Bank Pension Scheme No.1, Lloyds Bank Pension Scheme No.2 and HBOS Final Salary Pension Scheme) between 17 May 1990 and 6 April 1997 should be equalised. We will now work through the details of the judgement and will update this website as we know more. For more information about GMPs and the judgement please see our FAQs.’
October 26 2018
GMP Equalisation hearing
The Judge is expected to issue his ruling later this year. Please see the FAQs for details about the questions that we asked the Court https://www.lloydsbankinggrouppensions.com/trustee/faqs
October 26 2018
Day 10: GMP Equalisation
Today was the final day of the hearing with The Court hearing closing submissions from all parties. Judge Mr Justice Morgan will report back his findings in due course. We will ensure that any updates are communicated to members and will update the FAQs accordingly:
https://www.lloydsbankinggrouppensions.com/trustee/faqs
July 30 2018
Day 9: GMP Equalisation
Today the Court hearing reached its penultimate day with Judge Mr Justice Morgan hearing representations from the Bank, the Representative Beneficiaries and the DWP. For further details on what GMPs are and how they could affect pension scheme members, see our FAQs and video:
https://www.lloydsbankinggrouppensions.com/trustee/faqs
July 17 2018
Day 8: GMP Equalisation
Today the Court hearing continues with Judge Mr Justice Morgan hearing representations from the Bank and the Representative Beneficiaries Further information can be found on our FAQs page https://www.lloydsbankinggrouppensions.com/trustee/faqs
July 16 2018
Day 7: Most popular FAQ
This week, the most popular FAQ that members have been clicking through to is 'how much money could members get from this?' Members who are affected are unlikely to see a big difference in their pension. For members who do have a GMP, it’s usually only a small part of their pension. So even if the Court decides that their GMP should be treated differently, members are likely to see little or no difference to their pension overall. Some stories in the media have speculated about how much more pension members might get over their lifetime. Other stories say that members will get nothing. At the moment, we just don’t know. But we’ll keep you up to date on our website and once we know the outcome of the Court hearing we’ll write to any affected members directly. Further information can be found on our FAQs page https://www.lloydsbankinggrouppensions.com/trustee/faqs
July 13 2018
Day 7: GMP equalisation
Today Judge Mr Justice Morgan continued to hear representations in the Court hearing. For further details on what GMPs are and how they could affect pension scheme members see our FAQs and videos https://www.lloydsbankinggrouppensions.com/trustee/faqs
July 13 2018
Day 6: GMP Equalisation
The Trustee is in the High Court again today seeking guidance on whether it should, and if so how it should, equalise the way GMPs (Guaranteed Minimum Pensions) are treated. The Court hearing is expected to give direction on what needs to be done to address the issue of GMP equalisation, a complex issue which affects many pension schemes.
July 12 2018
Day 5: update
Today the Court hearing continued with Judge Mr Justice Morgan hearing representations from the Bank and the Representative Beneficiaries.
July 11 2018
Day 4: Update
Today the Court hearing continued with Judge Mr Justice Morgan hearing representations from the Bank and the Representative Beneficiaries. For further details on what GMPs are and how they could affect pension scheme members see our FAQs and videos. https://www.lloydsbankinggrouppensions.com/trustee/faqs
July 10 2018
Day 4: GMP Equalisation
Day 4: Today the Court hearing into GMPs (Guaranteed Minimum Pensions) continues. Take a look at our short video with pensions expert Joanne Segars explaining the background to the Court hearing and why GMPs are such a complex issue for pension scheme members. You’ll also find answers to common questions in our FAQs https://www.lloydsbankinggrouppensions.com/trustee/faqs
July 10 2018
Day 3: GMP Equalisation
The GMP Court hearing continues today, we’ll keep you updated as it progresses. In the meantime, you can check your pension details and get information on the value of your retirement savings on Your Pension https://epa.towerswatson.com/accounts/lbg/
July 9 2018
Day 2: GMP Equalisation
Today the Court hearing continued with Judge Mr Justice Morgan hearing representations from the Bank and the representative Beneficiaries. The Trustee is seeking guidance from the High Court in relation to two broad questions: a. Do we need to equalise the way GMPs are treated? b. If yes, do we need to do it in a certain way, or do we have a choice? We have developed two videos explaining the background to this Court hearing and what it means for members. You’ll also get answers to common questions in our FAQs: https://www.lloydsbankinggrouppensions.com/trustee/faqs
July 6 2018
Day 2: GMP equalisation
Today Judge Mr Justice Morgan will continue to hear representations in the Court. We’ll keep this website updated as the hearing progresses. For further details on what GMPs are and how they could affect pension scheme members see our FAQs and videos. https://www.lloydsbankinggrouppensions.com/trustee/faqs
July 6 2018
Day 1: GMP equalisation
The Trustee gave its opening submissions to the Court today. The hearing is expected to last around two weeks. We’ll keep you updated as it progresses. In the meantime, take a look at our videos and FAQs if you haven’t already.
July 5 2018
Day 1 of the High Court hearing
Today the High Court hearing begins with Judge Mr Justice Morgan looking at the complex issue of Guaranteed Minimum Pension (GMP) equalisation. The Trustee is seeking direction from the High Court in relation to two broad questions: a. Does the Trustee need to equalise the way GMPs are treated? b. If yes, does the Trustee need to do it in a certain way, or does the Trustee have a choice? The Court hearing is being closely watched across the pensions industry and the results of any Court decision could affect many other UK defined benefit pension schemes. We will keep this website updated throughout the Court hearing and share new information at the earliest opportunity to help you understand what impact, if any, this will have on your pension. Take a look at the FAQs and videos on our website for useful background on what GMP means and who could be impacted: https://www.lloydsbankinggrouppensions.com/trustee/faqs
July 5 2018
GMP Court hearing
The GMP Court hearing is starting on 5 July. Keep checking back for updates as the hearing progresses.
June 27 2018

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

No GMP – not 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.

Has a GMP – could be affected

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.

Getting a GMP as a part of pension – could be affected

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.

Has a GMP but transferred to a different scheme – could be affected

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.

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