UK Edition
Lloyds faces legal fight over pensions discrimination
A long-running pensions quirk that created a pay gap between men and women workers is to come before an employment tribunal this year, after a trade union for Lloyds Bank staff launched a case that it thinks could be worth £300m.
Women who earned guaranteed minimum pension (GMP) payments at the bank are losing out on up to £2,000 each, according to Lloyds Trade Union, which is co-ordinating the discrimination case.
These payments, which were offered to staff in place of an earnings-linked state pension from 1978 to 1997, were tied to the state retirement age at the time, meaning the amount paid to women retiring at 60 can often differ from men who were expected to work until the age of 65.
The Department for Work and Pensions tried to address this discrepancy across British businesses in 2012 but withdrew its plans after the pensions industry warned that it would cost at least £13bn to fix.
“GMPs is one of the last bastions of pension discrimination and the issue needs to be resolved now. Up to five million women, including up to 148,000 in Lloyds Banking Group, have either got or are going to get smaller pension increases than men and that is simply unacceptable,” said Mark Brown, general secretary at Lloyds Trade Union.
If all 148,000 active, deferred and retired female members of Lloyds' schemes were reimbursed at a rate of £2,000 each, this would cost the bank £300m, the union said.
Alastair Meeks, a pensions specialist at the law firm Pinsent Masons, said the huge cost of addressing this issue stems from practical difficulties in working out the sums owed to savers that would vary depending on their start date, retirement age and life expectancy, which in some combinations can leave men worse off than women.
“One reason why very few schemes have tackled this problem is that even if you decide you should, the question is how to do it. There’s no easy answer, as the DWP found out,” he said.
Whitehall experts are now exploring reforms that would allow employers that offered GMP to convert these top-up programmes into other pension payments, although this would need Parliament to amend the relevant pension and equality laws.
Lloyds declined to comment. The bank's various pension schemes have around 335,000 members and £20.6bn in place to fund their retirement.
LTU, which represents more than 25,000 employees, was "derecognised" by the bank last year.
The employment tribunal hearing, expected to be scheduled for later this year, comes at a time of fierce political debate about the state of women's pensions as the female retirement age rises to 66 by 2020.
Former minister Ros Altmann left the Government last month, complaining that "short-term political considerations" hampered efforts to improve the treatment of older women.