This is a very important case for the members of the schemes involved and for the employers sponsoring the schemes.
It is also potentially significant for the UK government (that took part in the case).
For other schemes that were contracted out during the Barber window and face the similar issues it is a key decision to be watched.
It may be that Lloyds will apply to appeal to the Court of Appeal. On the other hand, a spokesperson for Lloyds has been quoted as saying that the case focused on a complex and longstanding industry-wide issue. The group welcomed the clarity the court had provided and would be working through the details with the trustee in order to implement the court’s decision. This could be an early sign that an appeal will not be pursued.
The court’s decision
The court held that the trustee of the three schemes is under a duty to amend them in order to equalise benefits for men and women in relation to the window period.
The court’s decision is a vital first step but there is a lot more legal and actuarial work to come.
Many other legal questions will need close attention too. To pick a few examples:
- For what period in the past can a member claim previously underpaid benefits?
- What should be done in relation to benefits transferred into or out of an affected scheme?
- What to do about de minimis benefits generally and other questions around untraceable or deceased beneficiaries?
The path the Lloyds case takes from here will be instructive but may well not represent a model for other schemes to follow.
This is because it is possible that the wording of particular scheme rules could have a bearing on how equalisation is carried out in practice.
Trustees' point of view
- In member communications the general message could be to the effect that a key first step in a headline equality case has gone in favour of the members. But even for Lloyds members it is likely to be a considerable time before they know the financial effect on them.
- Among the large questions that now present themselves is the technical one of how the trustee plans to go about 'equalising benefits'. The range of options is potentially broad. There is some discussion of this in the judgment.
- Sponsors should take stock of how much they know about the best and worst case outcomes for their particular scheme and consider whether any further preparation is worthwhile pending more news of how equalisation is carried out in the Lloyds case.
- Head of Pensions
- Pensions Services
- Pensions Legal Advice