Lloyds Banking Group would likely be required to pay out up to £150 million after the High Court ruled today that it should equalise the payments for the female and male members of the pension scheme of the company.
Three female members of the pension scheme had issued a complaint against the company as they discovered that they were being discriminated against. They said that their pensions increased at a lower rate as compared to that of the male members of the scheme.
The decision could have a massive effect on many of the public and private sector pension schemes that have estimates of the total costs of equalising affected schemes hitting £20 billion.
A pensions partner at Herbert Smith Freehills who acted for Lloyds on the said case, Samantha Brown, stated: “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.”
She added: “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.”
Steve Webb, the Director of policy at insurer Royal London, stated: “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.”