The Judgement dealt specifically with members who previously transferred out of DB schemes. Trustees of schemes that provide GMPs accrued between 17 May 1990 and 5 April 1997 should already be taking steps to equalise the benefits of male and female members who are still in their scheme, following the ruling in the first Lloyds judgment. Trustees of affected schemes should already be taking steps to equalise the benefits of male and female members who are still in their scheme, following the ruling in the first judgment (in October 2018). Attorney Advertising. The forms included discharges as regards "benefits", but a top-up transfer did not constitute a benefit. GMP equalisation) and that this failure amounted to a breach of duty; that the calculation should be set aside by the court (since a failure as just described would make the trustees' decision voidable rather than automatically void). Your email address will not be published. The judgment in the 2nd instalment of the GMP equalisation litigation involving Lloyds Banking Group’s defined benefit (DB) pension schemes, has been handed down today (Friday, 20 November 2020). (See below as to discharge forms signed by members.). Breaking news: High Court rules on GMP equalisation. GMP-E and LBG-3: The third Lloyds Bank pension schemes hearing and implications for past transfers-out. A new ruling by the High Court means that trustees of defined benefit (DB) pension schemes must revisit and equalise guaranteed minimum pensions (GMP) for historic transfers. The Lloyds 1 judgment on revisiting transfers -out for GMP equalisation was handed down recently. The Court also considered two types of non-statutory transfer (transfers made under scheme rules, rather than under the cash equivalent legislation): The Court held that, provided the trustees had met the requirements of the preservation legislation as to transfers without consent, they had been discharged under the legislation when the bulk transfers were made. The court held that the Trustee was “under a duty to amend the Schemes in order t o equalise benefits for men and women so as to alter the result which is at present produced in relation to Judgment in the Lloyds GMP Equalisation case. Trustees of receiving schemes will also need to take action to equalise the benefits payable to members in respect of historic transfer payments received by their scheme, where those benefits are inadequate due to the effect of GMPs accrued under the transferring scheme. The High Court has issued a long-awaited follow-on judgment in the Lloyds Bank case. Some of the Court's conclusions are specific to the three schemes associated with Lloyds Bank (the "Lloyds schemes"). Furthermore claims were not subject to the forfeiture provisions in the Lloyds schemes' rules, for one or both of the following reasons: The Court said that trustees should not take a purely reactive approach as regards top-up transfers. On 26 October, the High Court delivered its landmark decision in the Lloyds Bank case, ruling that Guaranteed Minimum Pensions (GMPs) must be equalised between men and women and that past underpayments must be corrected. In view of its conclusion about the wording of the Lloyds scheme forms, the Court did not have to decide whether (as a matter of law) discharge forms could relieve trustees from liability to make top-up transfers. Accounting for the next pensions equalisation challenge. The judgment suggests that many transfer payments made since May 1990 will need to be topped up, to allow for GMP equalisation. 24 November 2020. Almost three quarters seeking to complete back payments by 2022. The judgment in the 2nd instalment of the GMP equalisation litigation involving Lloyds Banking Group’s defined benefit (DB) pension schemes, has been handed down today (Friday, 20 November 2020). BDB Pitmans. On 26 October 2018 Mr Justice Morgan handed down Judgment in Lloyds Banking Group Pensions Trustees Limited v Lloyds Bank PLC & Others. 20 November 2020. That question is addressed in the follow-on judgment. Over two years on from its original decision, on 20 November 2020, the High Court handed down its judgment in the latest instalment of the Lloyds saga. As noted in our most recent blog on Guaranteed Minimum Pension (GMP) equalisation, the third hearing in the Lloyds Banking Group Pensions Trustees Ltd v Lloyds Bank PLC & Others (HC-2017-001399) (“Lloyds case“) took place in May. The Court held that top-up claims from transferees were not subject to any statutory limitation period. GMP equalisation: High Court rules on past transfers. Post was not sent - check your email addresses! Share on Twitter. As reported in our article in November, GMP Equalisation - transfers out, the most recent judgment in the series of Lloyds Bank cases, handed down in November 2020 (the Transfer Judgment), considered the obligations on trustees of contracted out defined benefit schemes who had transferred out benefits to other pension schemes. GMP equalisation: Court ruling as to past transfers. “Mayer Brown” and the Mayer Brown logo are trademarks of Mayer Brown. As a result of the Schemes’ review of pensions for the effect of unequal Guaranteed Minimum Pensions Share on Linkedin. The cash equivalent legislation did not provide that the defective transfer value calculation was final and binding, or discharge the trustees from liability in respect of the shortfall. Schemes are seeking to address 'GMP equalisation' over the next 2-3 years. If you need a refresher about GMP and why equalisation is needed, we have produced a brief background document. The current position The October 2018 Lloyds Bank judgment made it clear that all trustees need to equalise GMPs. pensions (GMP) equalisation, and whether affected trustees will need to revisit past transfers out of a formerly contracted-out pension scheme. Listen to the discussion about what the ruling now means for DB … If a receiving scheme was unwilling or unable to accept a top-up transfer, an appropriate solution would need to be agreed between the transferring trustees and the transferee, or in the absence of agreement could be imposed by the courts (which might, for example, order the trustees to pay compensation). The comments above relate mainly to statutory transfers. Given the way the forms were worded, the Court concluded that the answer was no. Here is a bird’s eye view of what was decided, what is left undecided and how we can help: 1. In this briefing we look at the judgment and consider the practical implications for pension schemes. that when calculating the transfer value, the trustees had failed to consider a relevant matter (i.e. In October 2018 the Court held that schemes had to equalise benefits, as between men and women, for the effect of guaranteed minimum pensions ("GMPs"). The follow-on judgment could yet be the subject of an appeal. Our 2018 client update provided details. The Court noted that, where a transfer had been made to a defined benefit scheme, the receiving trustees might have their own duty to equalise, on the basis of the 1994 Coloroll case. However, the Court recognised that it might be possible to provide a residual benefit if both parties agreed. What did the Court decide? High Court rules on GMP equalisation of transfers. Andrew Short QC and Nicholas Hill acted for the Representative Beneficiaries, instructed by Ivan Walker of Walkers Solicitors. The respective duties were concurrent, and both would have to be performed. The Court held that, under the cash equivalent legislation, trustees had a duty to pay a correctly-calculated transfer value. 3. A member cannot require the Trustee to provide a residual benefit rather than a top-up payment. Required fields are marked *, You may use these HTML tags and attributes:
. The judgment confirms that trustees of DB schemes that provide Guaranteed Minimum Pensions (GMPs) are required to revisit and, where necessary, top-up historic cash equivalent transfer values (CETVs) that have been calculated on an unequalised basis. Nor did the Court decide whether defined contribution schemes might have a duty to equalise on the Coloroll basis. The Judgment on the treatment of historical transfers is awaited, but in the meantime, some help to … I then dealt with some of the consequences of the fact that the trustee of the schemes had not performed its obligation to equalise at an earlier point in time, when it ought to have done. The articles published on this website, current at the dates of publication set out above, are for reference purposes only. The judgment in the Lloyds case considered a number of methods by which pension scheme benefits might be adjusted for Guaranteed Minimum Pension (GMP) equalisation. Lloyds 3: Historic transfers and GMP equalisation. GMP equalisation We’ve put together this guide to help trustees through the complexities of GMP equalisation. Where transfers had been made without allowing for GMP equalisation, what liability if any did the transferring trustees retain? GMP equalisation ; A second hearing in the Lloyds Bank GMP equalisation case is expected in April 2020 in which the parties are seeking guidance relating to the extent of the trustee’s obligation to revisit past transfers out of the pension schemes. Trustees had a duty to be proactive. First Briefing, November 2020 – Lloyds Banking Group judgment No 3 Lloyds Banking Group judgments The first judgment, on 26 October 2018, established that trustees have a duty to pay equal pension benefits (in respect of benefits earned since 17 May 1990), and where necessary will need to adjust benefits to address the inequalities that arise from Guaranteed Minimum Pensions (GMPs). Favorited Content. However, the Court did not say that this would necessarily involve identifying and topping up every relevant past transfer. This is another landmark ruling which is likely to affect every DB scheme in the UK that provides GMPs accrued between 17 May 1990 and 5 April 1997. Given the way in which the forfeiture provisions were worded, they did not in any case apply. The legal position regarding whether there was a legal requirement to equalise GMPs remained uncertain until the judgment of the High Court on 30 October 2018 in the case of Lloyds Banking Group Pensions Trustees Ltd v Lloyds Bank PLC and others. GMP equalisation: Court ruling as to past transfers. The existence of such a duty made no difference to any top-up duty of the transferring trustees. Under the rules of the Lloyds schemes, the trustees (or in one case the employer) had considerable discretion as to how non-statutory transfer values were calculated. Court hearing on pension equalisation earmarked for 2020. The trustees had breached their duty at the time when they made the transfer. As reported in our article in November, GMP Equalisation - transfers out, the most recent judgment in the series of Lloyds Bank cases, handed down in November 2020 (the Transfer Judgment), considered the obligations on trustees of contracted out defined benefit schemes who had transferred out benefits to other pension schemes. 25 November 2020. Lloyds Banking Group Pensions Trustees Ltd v Lloyds Bank PLC and others . At 10:30 am on Friday 20 November 2020 Justice Morgan issued his long awaited judgment in the latest instalment of the Lloyds Banking Group case on equalising for Guaranteed Minimum Pensions (GMPs). Trustees will also need to consider the implications of the judgment on past transfer payments made by way of a bulk transfer from their scheme and individual transfers made under the rules of their scheme (as opposed to under the CETV legislation). The judgment is expected to increase the Lloyds Bank Schemes liabilities by around £100m. Pensions Alert: GMP Equalisation and Past Transfers. The judgment was announced on 26 October 2018 and confirmed that GMP equalisation is required. The judgment suggests that many transfer payments made since May 1990 will need to be topped up, to allow for GMP equalisation. In respect of individual transfer payments made pursuant to the CETV legislation, Morgan J held that: The judge considered whether the Trustee’s obligations were limited or otherwise discharged by the discharge provisions in the CETV legislation, specific discharge forms signed by the transferring members, the Schemes’ forfeiture provisions or the Limitation Act 1980. It provided the Trustees with a number of options for achieving this. The new judgement, issued on 20 November, ruled that Lloyds Banking Group … Download ‘GMP equalisation’ report (292 KB, PDF) When the State Earnings Related Pension Scheme (SERPS) was introduced in April 1978, it was possible to contract-out of it into an occupational pension scheme. Accordingly the trustees retained no liability in respect of GMP equalisation. The judgment in the 2nd instalment of the GMP equalisation litigation involving Lloyds Banking Group’s defined benefit (DB) pension schemes, has been handed down today (Friday, 20 November 2020). Nor (on the wording of the Lloyds schemes' rules) would the transferee retain any right to benefits under the transferring scheme. For example, a forfeiture provision which referred only to "benefits" did not apply, because a top-up transfer did not constitute a benefit. While the judgment relates to the Lloyds Banking Group schemes, it provides a legal precedent that affects other schemes as well. On 20 November 2020, the High Court handed down a judgment regarding this issue, in the latest instalment in legal proceedings relating to a number of pension schemes connected with the Lloyds Banking Group (the “Lloyds schemes”). Instead, a transferee who wished to mount a challenge would need to show: Unless and until a transferee succeeded on both of these points, he/she had no right to a top-up payment. The third hearing in the Lloyds Bank GMP equalisation case started on 4 May and finished this week. Therefore, Trustees now have to assess the additional liability that this generates. Morgan J, left open the question of whether a similar obligation arises where the receiving scheme is a different type of scheme, such as a DC occupational pension scheme or a personal pension plan. Subject to that, schemes will need to consider the judgment's implications with their advisers. On 26 October 2018, the High Court handed down an important judgment on equalisation of guaranteed minimum pensions (GMPs) in Lloyds Banking Group Pensions Trustees Limited v Lloyds Bank plc and others [2018] EWHC 2839 (Ch) (28 October 2018) (Lloyds).Since the judgment was handed down, the pensions industry has been grappling with how to implement the equalisation of GMPs in practice. It means that trustees of such schemes are required to revisit cash equivalent transfer values paid to former members and make a top-up payment where a member has not been paid their full entitlement. The High Court Judgment in the Lloyds Bank Transfer case on 20 November 2020 provides answers but leaves plenty undecided. The need to revisit past bulk transfers and individual transfers made under the rules of a scheme will also need to be considered in light of this judgment. The latest piece of the GMP equalisation jigsaw was handed down by the High Court on 20 November 2020, as part of the long-standing litigation relating to Lloyds Banking Group’s pension schemes. The latest judgment in November 2020 has confirmed that GMP equalisation should be extended to historic cash equivalent transfer values. Viewpoint. GMP equalisation for small (and other) schemes 31/12/18 Roderick Ramage BSc(Econ) solicitor ... summary of the Lloyds Bank judgement 1.1 The Lloyds Bank decision was by the High Court on 26 October 2018, and it is possible that there will be an appeal. But the judgement also establishes some important general principles. Introduction Over two years on from its original decision, on 20 November 2020, the High Court handed down its judgment in the latest instalment of the Lloyds saga. Almost three quarters seeking to complete back payments by 2022. Richard Evans. Date: 26th Oct 2018. uncertain until the judgment of the High Court on 30 October 2018 in the case of . Introduction. A second hearing in the Lloyds pension case has been earmarked for early next year, which is … At 10:30 am on Friday 20 November 2020 Justice Morgan issued his long awaited judgment in the latest instalment of the Lloyds Banking Group case on equalising for Guaranteed Minimum Pensions (GMPs). In […] GMP equalisation: New year, new focus. Guidance on GMP Equalisation and the Lifetime Allowance The information in this guide applies to pensioners of the Lloyds Bank Pension Scheme No. Herbert Smith Freehills LLP is authorised and regulated by the Solicitors Regulation Authority. Most of the discussion in the follow-on judgment relates to such statutory transfers. Mayer Brown is a global services provider comprising associated legal practices that are separate entities, including Mayer Brown LLP (Illinois, USA), Mayer Brown International LLP (England), Mayer Brown (a Hong Kong partnership) and Tauil & Chequer Advogados (a Brazilian law partnership) (collectively the “Mayer Brown Practices”) and non-legal service providers, which provide consultancy services (the “Mayer Brown Consultancies”). Pensions; Share Now. Therefore, as well as requiring trustees of affected schemes to revisit past CETV payments to equalise them for the effect of GMPs, this judgment may also require trustees of all schemes to revisit past transfer payments where errors in calculating a members’ entitlement have since come to light. Authors. The obligation to make a top-up payment arises regardless of whether the transfer payment was made to a DB or a defined contribution (DC) occupational pension scheme, a personal pension scheme or an overseas scheme. One such consequence was that it was obliged to pay arrears of pension to certain pensioner members. Specific legal advice about your specific circumstances should always be sought separately before taking any action. In particular, the fact that Morgan J held that the Trustee could not rely upon any statutory, rule-based or contractual discharge and that claims are not time-barred could have much wider implications, as it means that trustees may not benefit from any kind of discharge or limitation defence in other circumstances where transfers subsequently turn out to have been calculated incorrectly. GMP equalisation (Part 1) – High Court rules that pension schemes are required to equalise benefits for the effect of GMPs, GMP equalisation (Part 2) – Next steps and immediate actions for trustees and sponsors, GMP equalisation (Part 3) – Latest judgment in Lloyds Bank case clarifies approach to equalisation when converting GMPs and may help with transfers, Your email address will not be published. Trustees were required to adjust the benefits which they provided for service from 17 May 1990 to 5 April 1997, so as to achieve equality. The transferee could not instead require the trustees to provide a residual benefit, nor could the trustees require the transferee to accept such a benefit. In the latest Lloyds judgment, the court decided that past statutory transfers should have taken into account the obligation to equalise for GMPs. Being proactive meant considering the obligations, rights and remedies arising from the judgment (including the absence of time bars); and then deciding what to do. GMP equalisation (292 KB, PDF) Download full report. Regional Head of Practice (EPI), Pensions, London, Professional Support Lawyer, Pensions, London. 1, Lloyds Bank Pension Scheme No.2 and the HBOS Final Salary Pension Scheme. equalisation of benefits. Ian Wright. October 26, 2020. Lloyds Bank GMP equalisation transfers judgment ... 20 November 2020, the High Court gave judgment in Lloyds Banking Group Pensions Trustees Limited v Lloyds … In our latest webinar, Jenny Chambers of Pinsent Mason joined us to discuss: the latest Judgment and what it may mean for your pension scheme and members Nor could any discharge in scheme rules assist: s129 Pension Schemes Act 1993 states that the requirements of the cash equivalent legislation override scheme rules. The judgment also reaffirmed the fact that, as well as there being an obligation on the trustees of a transferring scheme to revisit and, where necessary, top-up historic CETV payments, there is a concurrent obligation on the trustees of a receiving scheme (where that scheme is a DB occupational pension scheme) to equalise the benefits of transferred-in members. Much may depend on the reason for the error. The High Court has issued a long-awaited follow-on judgment in the Lloyds Bank case. Details of the individual Mayer Brown Practices and Mayer Brown Consultancies can be found in the Legal Notices section of our website. Where the initial transfer payment was inadequate on the basis that it did not reflect the right to equalised benefits, the Trustee is under an obligation to make a top-up payment to the receiving scheme on behalf of the transferred member. In the judge's view, the forfeiture provisions were overridden by s129 Pension Schemes Act 1993 (see above). Click to share on LinkedIn (Opens in new window), Click to email this to a friend (Opens in new window), Click to share on Twitter (Opens in new window). The Trustee of Lloyds Banks’ schemes owed a duty to a transferring member to make a transfer payment which was correctly calculated and which reflected the member’s right to equalised benefits. Individual transfers-out are usually under the "cash equivalent" legislation (ss93-101 Pension Schemes Act 1993). Published Friday 28 August 2020. The third judgment in the Lloyds court proceedings on Guaranteed Minimum Pension (GMP) equalisation has now been handed down (Lloyds Banking Group Pensions Trustees Ltd v Lloyds Bank PLC & Ors [2020] EWCh 3135 (Ch)) (Lloyds 3).This covers the duty of pension scheme trustees to equalise past transfers out of the scheme. He concluded that they were not. Schemes are seeking to address 'GMP equalisation' over the next 2-3 years. In the absence of any discharge, the transferee could require the trustees to pay a top-up transfer to the receiving scheme, equal to the shortfall plus simple interest at 1% above base rate. Click here for a PDF of this Alert. Lloyds GMP Equalisation judgment confirms GMPs do need to be equalised and gives direction on some long-standing questions The High Court has today (26 October 2018) handed down its judgment in the Lloyds case relating to equalisation of member benefits for the gender effects of Guaranteed Minimum Pensions ("GMP equalisation").
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