Further Judgment on GMP Equalisation - Lloyds Banking Group Pensions Trustees Ltd v Lloyds Bank plc  EWHC 3135 (Ch)
A further judgment in relation to the Lloyds pension case handed down in November provides a further piece in the puzzle of GMP equalisation.
This judgment addressed some issues regarding past transfers of benefits to other pension schemes and in particular found that:
- for statutory transfers where the member has an entitlement under legislation to transfer that there is a duty on the trustee(s) to pay an amount reflecting a right to equalised benefits and therefore to the extent that the amount paid did not reflect that a top-up payment is required. Any claim from a member in relation to this will not be time barred and simple imterest at 1% above base rate should be added to the top-up payment;
- for non-statutory rules based transfers special considerations apply; and
- for bulk transfers under the preservation legislation resulting in "mirror-image" benefits in the receiving scheme, provided regulation 12 of the Preservation Regulations has been complied with and such transfer made in accordance with the rules of the transferring scheme, transferring members become entitled to benefits under the receiving scheme and are no longer entitled to benefits under the transferring scheme.
Whilst this does provide some further helpful clarification there remain a number of practical points that are unclear and that will require consideration by trustees in relation to both their relevance to the scheme and how best to tackle these in practice.
Pension Schemes Bill - progress update
Although it was previously announced that the Bill would come into force before the end of 2020, this now appears unlikely with a date yet to bet set for the next stage of the Bill's progress - which is for the House of Lords to consider the Commons amendments to the Bill.
Once enacted this legislation will, amongst other things, extend The Pensions Regulator's enforcement powers and introduce new criminal sanctions as well as paving the way for collective defined contribution schemes and the pensions dashboard.
PPF levy changes confirmed
Whilst the levy determination will not be published until January 2020 the PPF have confirmed in advance of this that there will be changes to the levy rules to introduce supportive measures following consultation.
The announcement confirms that the PPF will:
- implement the small scheme adjustment, which halves levies for schemes with less than £20 million in liabilities and tapers levies for schemes with between £20 million and £50 million of liabilities;
- implement the reduction in the risk-based levy cap to 0.25 per cent of liabilities from 0.5 per cent; and
- continue to measure insolvency risk on the basis in use since April using credit ratings and the PPF specific insolvency risk model operated by Dun & Bradstreet (D&B).
The PPF note that they "hope that these measures will help with affordability while preserving a levy that is risk-reflective and incentivises measures to reduce risk.".
Walker v Innospec – not to be impacted by Brexit
In Walker v Innospec, the Supreme Court confirmed that UK legislation (which allowed the benefits of a same sex surviving partner of a pension scheme member to be limited to those accrued from 5 December 2005 (the date on which The Civil Partnership Act 2004 came into force), by effectively making this an exception from the Equality Act 2010) was incompatible with the EU Directive it had intended to implement and the exception must be disapplied.
Guy Opperman MP, has now confirmed that this will remain the position after the Brexit transition period ends and that the government is looking to provide in legislation that the exception is disapplied.
In accordance with the CMA Order trustees are restricted from either continuing to obtain Investment Consultancy (IC) services under an existing contract, or from entering into a new contract for the supply such services, unless they have set the provider strategic objectives. There is a requirement to review the performance of each IC provider against their objectives at least every 12 months.
The CMA Order sets out that a Compliance Statement shall confirm the extent to which the relevant applicable Articles of the relevant Part or Parts of the Order that were in force during the reporting period have been complied with during that period.
For the parts of the order that do not relate to fiduciary management pension scheme trustees must submit a compliance statement by 7 January 2021. The CMA's guidance does not clarify whether the deadline includes 7 January 2021, or whether the compliance statement should be submitted before that date, but there are calls for Trustees to submit as soon as possible to ensure compliance with the Order.
If you have any questions, please get in touch with one of the contacts below.