THE HIGH Court has dealt a blow to Lloyds Bank's attempts to equalise pension benefits between the sexes by 'levelling down' women's benefits. The result is likely to mean that men's benefits will be levelled up, at a cost of around £100 million.
This ruling follows the 1990 European Court ruling in the Barber case, requiring equal benefits between the sexes. On this occasion, it is clearly an example of discrimination law working in favour of males.
The Lloyds Bank Pension Scheme, established in 1931, has assets of around £4 billion, a surplus of around £500 million and 108,000 members; 43,000 current employees, 16,000 pensioners and 49,000 deferred pensioners (employees who have left but not yet drawn a pension).
Lloyds Bank equalised benefits in 1974. The 2,000 women who joined the bank before 1974 are able to retire at 55 with full pension after 37 years of service. Men had to wait until 60 and serve at least 40 years to get the same benefit.
This European Court ruling means that with effect from 1990 the 4,700 men affected have been 'levelled up' to enjoy the same benefits as the women. This will cost the scheme £100 million.
To try and reduce this cost, the bank proposed to 'level down' the female members' benefits with effect from May 2000. The trustees agreed in principle, but went to court for a ruling as to whether the pension scheme rules would allow this. The rules provide that the "pecuniary benefits secured" for members cannot be reduced without their consent.
The bank argued that "pecuniary benefits secured" means only the pensions earned to date, and does not cover benefits to be earned in the future. Mr Justice Rimer dismissed this argument as "wishful thinking" by the bank. He accepted the argument, put forward on behalf of members by Eversheds' solicitors, that the term covers all benefits promised to members up to the time of retirement.
The bank will now have to redraw its proposals for equalising benefits between the sexes. If it cannot take away the benefits promised to females, then it has no option but to increase males' benefits.
The ruling is specific to the wording of the Lloyds Bank Scheme. However, employees generally can take comfort that the case shows courts are reluctant to allow employers to take away benefits, making 'levelling down' more difficult. If employers want to level up, they'll have to check carefully whether their scheme rules will allow it.