Pension scheme trustees are still dealing with the ramifications of a judgment in 1990 (Barber v Guardian Royal Exchange) that occupational pensions must be equal for men and women. Many schemes which were contracted out of the State pension scheme provide members and their spouses with Guaranteed Minimum Pensions which are defined by statute to be different for men and women. Until recently, most schemes have ducked the GMP equalisation problem due to its complexity and uncertainty as to what needed to be done. Recent judgments in relation to the Lloyds Bank pension schemes have confirmed however that trustees must equalise benefits to remove the discriminatory effects of GMPs.

That is a big problem for trustees because they not only need to equalise current benefits, they also need to look at all the transfer values they have paid for members over the last 30 years and see if they need to make any top-up payments. The recent Lloyds judgment confirmed that there is no statutory limitation period for members’ claims to top-ups from assets held by the trustees.

Fortunately, some help is at hand in guidance which has been issued by the Pensions Administration Standards Association which does a good job of explaining the mess schemes find themselves in and how trustees may discharge their obligations in a pragmatic way.

It isn’t going to be easy and in some cases the administration costs might exceed the amounts involved. Trustees may look to forfeiture provisions in their scheme rules but in most cases these are unlikely to apply. The practical problems are likely to be considerable: data on past transfers may be missing or incomplete, former members will need to be traced and the trustees will need to find a way to discharge their liabilities, hopefully without incurring too many costs.

Read Max’s article in The Legal Diary.