Lloyds Banking Group could face £150m pensions hit after court ruling
Lloyds Banking Group could have to pay out up to £150m after the High Court ruled today that it should equalise payments for male and female members of its pension scheme.
Three female members of the pension scheme had complained they were being discriminated against as their pensions increased at a lower rate than that of male scheme-members.
The decision could have a massive impact on many public and private sector pension schemes with estimates of the total costs of equalising affected schemes hitting £20bn.
Samantha Brown, a pensions partner at Herbert Smith Freehills who acted for Lloyds on the case said: “This will increase the liabilities of many defined benefit schemes – a cost that will ultimately have to be met by employers. It has previously been estimated that FTSE100 companies alone could face an immediate P&L hit of up to £15 billion as a result of this.
“This case highlights the nightmarish complexity of UK pensions legislation. It also illustrates the perils faced by employers who, having complied with the UK's legislative requirements to the letter, now face a significant additional liability because that legislation and the corresponding state pension benefits treat males and females differently."
Director of policy at insurer Royal London Steve Webb, said: “It is good news that this ruling finally provides clarity over this contentious issue. Schemes will need urgent help from government and regulators to know the best way to respond to this judgment. Members of company schemes could collectively receive a multi-billion pound windfall, but the complexity of making the necessary calculations means that members will not be receiving cheques any time soon”.