Hundreds of thousands of former members of final pension systems are ready to take a cash boost after a landmark Supreme Court ruling on historic gender discrimination.
In 2018, the Supreme Court banned various “minimum guaranteed pension payments” for men and women. As a result, trustees were ordered to equalize the GMP benefits, leaving companies with a bill of around £ 10 billion.
On Friday, the Supreme Court extended this ruling to include former scheme members who switched GMP benefits to other pension plans after 1990, which means they will now have the right to recalculate their payments.
As many as 1 million people may need to verify their benefits as a result, according to pension experts.
“This is a far-reaching ruling that is likely to affect hundreds of thousands of people with guaranteed minimum pensions, and add to corporate expenses,” said Tom Eurath, partner at Aon Actuaries.
“One in four who have moved may be eligible for an increase in their pension as a result.”
Towers Watson Actuarial said any compensation would be paid as a pension increase, and could range from a few thousand pounds to 30,000 pounds in some cases.
The GMP is the minimum pension that employers were required to provide for their members from Final Salary Schemes who contracted with the State’s Second Pension from 1978 through 1997.
Historically, good manufacturing practices for men and women were allowed to rise each year at different rates, reflecting the fact that the retirement age for males and females was not equal at the time.
The trustees said many of the schemes may be struggling to comply with Friday’s ruling, which only applies to GMPs due between 1990 and 1997, given that it requires tracking of former member records.
“They will now need to search for data to recalculate transfers outside the charts dating back to 1990,” said Adrian Kennett, professional trustee at the Dalriada Trustees.
“It’s another sore day on the topic of the good manufacturing practice equation – management systems and processes are really going to be put to the test.”
Lawyers said it is difficult to estimate the cost of the new ruling for employers, who are already suffering the financial blow to the 2018 ruling.
The 2018 ruling came as a result of a lawsuit filed by Lloyd’s Banking Group pension trustees against Lloyd’s Banking Group. Lloyds Banking Group said in a statement that it welcomed the decision on Friday, which provided an explanation regarding GMP equivalency.