The government and regulators need to “act quickly” to clarify what the recent ruling in the Lloyds Bank case over guaranteed minimum pensions (GMPs) means for pension transfers, according to Royal London director of policy Steve Webb.
Webb has called for the Department for Work and Pensions, the Financial Conduct Authority and The Pensions Regulator to provide a public statement to clear up confusion in the pensions market.
On 26 October 2018, the High Court ruled that Lloyds must now equalise pensions benefits for men and women, which could cost the bank up to £150m, in a case that set a precedent for thousands of companies.
However, exactly how and when this should be done, and whether people who have already transferred out could be affected, is not clear from the ruling.
Webb commented: “The recent Lloyds Bank case has made clear that pension schemes need to tackle inequalities in their schemes, but many questions remain unanswered. It is vital that pension savers who are considering a transfer out are not left in limbo while the industry works out what exactly this ruling means.”
Some pension schemes and administrators feel that they should not process transfers until equalisation has come into effect, while others have even put a temporary hold on transfers.
This has left many savers unable to transfer any of their pension funds until clarity has been provided.
Schemes are understood to be concerned that if they carry out transfers based on existing valuations they may later be found to have deprived members of the potential uplift from GMP equalisation.
This is despite the pensions industry welcoming the “clarity” that the High Court ruling brought, with Webb describing it as “good news” on 26 October, as it “finally provides clarity” on a “contentious issue”.
Webb added: “The pensions industry and pension savers urgently need to hear from the authorities what they should do now with regard to pension scheme valuations and pension transfers. With some pension transfers already on hold, a public statement is urgently needed.”