High Court ruling on GMP equalisation

In October 2018 there was an important High Court case involving the Lloyds Bank pension schemes. In that case the High Court ruled that pension schemes must adjust scheme benefits to remove gender inequalities caused by Guaranteed Minimum Pensions (GMPs) earned in the period 17 May 1990 to 5 April 1997.


What is a GMP?

This is the minimum level of pension set by the Government that we must pay members who built up benefits between 6 April 1978 and 5 April 1997, when USS was contracted-out of the Additional State Pension. The legislation contains certain differences in the treatment of GMPs between male and female members, some of which favour male members and some favour female members.

As with other occupational pension schemes, the impact of this case is being considered by the trustee and our actuarial and legal advisers. Working out what the equalisation adjustments (if any) might be is a complex process and could take months to complete. Where members are affected, any required increase to benefits is likely to be relatively small.

Pensions, retirement lump sums, dependants’ pensions and transfers to other schemes are continuing to be paid while the trustee considers the outcome of the case. However, the payment of trivial commutation lump sums, where you may get a one-off payment rather than a small pension income if your benefits are very small, are currently suspended for members whose benefits include a GMP built up between May 1990 and April 1997. This is because if a trivial commutation was to be paid, and then changed in the future, it could breach tax limits.

The impact of the judgement will not be the same for every occupational pension scheme – we’ll provide more information on how our members may be affected as soon as we can. HMRC is expected to provide guidance in the coming months around various tax issues raised where GMP inequalities are addressed. However, timescales for this industry guidance are so far unclear and with another court hearing due in 2019 there is a lot more work to be done across the industry.

Published date: 20 May 2019