Pensions payouts must be equalised following discrimination row
Lloyds Banking Group may have to pay up to £150m as a result of a High Court ruling that it must equalise its pension payouts between men and women. The court ruled the banking group must amend its pension schemes to equalise benefits, after three women brought a case claiming sex discrimination on the grounds their pensions increased at a lower rate than those of their male colleagues.
The case focuses on Guaranteed Minimum Pensions (GMPs) for employees who contracted out of the State Earnings Related Pension (SERPs) scheme in the 1990s. At the point of contracting out, the employee and their employer paid a reduced rate of national insurance but the rules dictated that the company had to pay a GMP, which was “broadly equivalent” for tax purposes.
As a result of the retirement age for women being lower than men, the women in question will receive lower GMPs – that is, until the court ruled that this amounts to discrimination and ordered Lloyds to reimburse women.
The case could have widespread implications for other companies that have final salary pension schemes and it is claimed that 5 million members of 6,000 pension schemes could be affected. Trade Unions have said that this judgment will bring equality to millions of women across the country and clarity for other businesses which may be in a similar position to Lloyds.