The Bank, the Trustee Board and BTU have agreed jointly to refer the Union’s landmark legal action on Guaranteed Minimum Pensions (GMPs) to the High Court. Given what’s gone on over the past 18 months that’s not a sentence I expected to write.
Under what’s called a ‘Part 8’ referral the High Court will be asked to determine the answers to a series of questions on the equalisation of Guaranteed Minimum Pensions. The answers to those questions, which will be agreed by the three legal teams involved in this case, will have implications for 165,000 female members of the Bank’s defined benefit pension schemes and up to 5 million women across thousands of pension schemes. Many male members could also be affected because part of their pensions are not guaranteed to increase at all. This is a landmark legal case that will be followed very closely by the pensions industry.
The Department of Work and Pensions, whose legal experts have already said that GMPs must be equalised, has told the Union that it wants to be considered an ‘interested party’ to the case and we wouldn’t be surprised if they don’t appoint their own legal team to be represented at the High Court hearing.
What’s It Worth?
GMP equalisation affects up to 2,400 pension schemes and millions of women. According to a number of industry bodies it’s going to cost £13bn to clear up the mess.
We think that’s a conservative estimate and the figure, once you take into account all the associated legal and actuarial costs, is closer to £20bn. BTU’s actuarial adviser has looked at a range of members and estimated that the overall difference in benefits, depending on the calculating method used, could be worth up to £2,000 per female member of staff.
If you multiply that by the number of female members – active, pensioner and deferred – of the Bank’s pension schemes then that equates to nearly £300 million excluding the cost of implementing
any pension changes.
The Next Steps
BTU has submitted the cases to the Employment Tribunal on behalf of those thousands of members who registered to be part of our class action lawsuit. All those cases will be ‘stayed’ pending the outcome of the High Court action.
Those members who benefited from the Union’s non-signers legal victory, which was opposed by the General Secretary of Accord, will know that the wheels of justice move very slowly. Our expectation is that the case will go to the High Court next year. We will keep members informed of development through regular Newsletters.
And finally, those naysayers who said that derecognition would diminish our ability to influence what the Bank does were plainly wrong.