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High Court Rules Guaranteed Minimum Pensions Gender Biased

‘Landmark’ decision could cost UK pension industry up to £20 billion in payouts.

By Chris Butera

The UK’s High Court has ruled that Lloyds Banking Group’s pension plans must equalize guaranteed minimum pensions for men and women in a closely watched case that the Pensions Management Institute estimates could cost providers £10 billion to £20 billion in payouts.

“This landmark judgment resolves this pension discrimination issue for good and will bring equality to millions of women across the country,” said Mark Brown, general secretary of BTU, the trade union representing Lloyds Banking Group staff. “It’s simply unacceptable that 48 years since the passing of the Equal Pay Act in 1970 we are still fighting for equal treatment in the workplace.

BTU estimates that up to 5 million participants, the vast majority of whom are women, in 6,000 private sector pension plans, will benefit from the High Court’s ruling.

The case involved three women—Angela Sharp, Judith Cain, and Susan Dixon–who were members of Lloyds Banking Group’s final salary pension plan, and who claimed they were discriminated against based on their gender because their pensions increased at a lower rate than male members of the pension.

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At the crux of the case is how guaranteed minimum pensions are increased. Guaranteed minimum pensions were introduced in 1978 and allow employers that offered defined benefit plans to contract out their staff, and pay a reduced rate of National Insurance Contributions. In exchange for the lower rates, the companies promised that their pension would meet a minimum standard of benefits.

However, there have been complaints that guaranteed minimum pensions are inherently discriminatory because men and women accrue these at different rates, and they are entitled to them at different ages—60 for women and 65 for men.

“The trustee is under a duty to amend the schemes in order to equalize benefits for men and women so as to alter the result, which is at present produced in relation to GMPs,” said Justice Paul Morgan in his ruling, adding that “beneficiaries are entitled to receive arrears of payments due to them.”

The ruling directly affects the 230,000 members of Lloyds Banking Group’s pension plans, and could cost the company well over £100 million, according to BTU, with other estimates ranging as high as £150 million.

BTU said that the ruling has “major financial implications” for pensions, adding that “most of the FTSE 100 giants will have massive GMP liabilities, which could add millions to their burgeoning pension deficits.”

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Home > News > Newsmakers > Brazil’s President-Elect Urges Pension Reform ASAP
Newsmakers

Brazil’s President-Elect Urges Pension Reform ASAP

Jair Bolsonaro plans to meet with incumbent Temer to jump-start effort.   

By Chris Butera

Jair Bolsonaro, Brazil’s new president-elect, doesn’t want to wait until his January inauguration to tackle the nation’s pension reforms as he plans to hash things out with current President Michel Temer as early as next week.

Bolsonaro, who captured 55% of the votes in Sunday’s election, wants to tackle the issue as early as possible by reviving an unpopular bill, since he will not have much time to revise it once he takes the torch from Temer as the first of lower parliament’s two sessions begins in February.

“Any step taken now could help us next year,” he told Bandnews TV in a Tuesday interview.

Paulo Guedes, Bolsonaro’s economic advisor, also urged a quick overhaul, calling Brazil’s pension funds “an airplane with five bombs on board that will explode at any moment.” In an interview with Voa news, he said, “We’re already late on pension reform, so the sooner the better.”

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Plans to solve Brazil’s pension predicament come amid a backdrop of towering public debt and a troubled economy. Tuesday’s 3.7% rise in the Bovespa index was seen as an expression of confidence in the nation’s new leader.

Some political staffers in the legislative branch, such as Rodrigo Maia, speaker of the lower house, think rushing a reform is not in Brazil’s best interests.

“Voting any matter regardless of what it is, welfare or not, for the future government to suffer a defeat I think it is bad for the incoming government. We must have patience,” Maia said, as reported by the UOL news agency. “The conditions to approve it are still a long way from reality.”  

Temer had originally hoped to resolve the pension crisis last year by cutting benefits, bumping up the national retirement age, and adding years of service clauses for retirees to obtain their full benefits. But corruption charges and public protests slowed the process. After the protests led to military action, Temer decided he would leave the pension question to his successor.

Although the bill is still unpopular, Brazil’s economy isn’t getting any healthier, and the pension reform is the first of many steps Bosonaro must take to stabilize it.

“It remains an unpopular reform which a lame-duck leader has little power to push through Congress,” Leonardo Barreto, a Brazilian political consultant, told The Wall Street Journal. “This is a great opportunity to get it done.”

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