11 August 2021
Today the PASA chaired Equalisation Working Group has published supplemental guidance on the implications of the third Lloyds judgment of 20 November 2020 on past transfers.
The guidance addresses how past transfers out of a pension scheme may have been underpaid and the implications of both the Lloyds judgments and the much earlier Coloroll case on benefits granted following a transfer into a pension scheme.
Alasdair Mayes, Partner and Head of GMP Equalisation at LCP who helped draft the guidance said: “It’s really important that trustees address past transfers in a practical but robust way. The guidance explains the key issues and sets out practical solutions. In our experience the sums due to members are averaging less than 1% of the original transfer. That might sound small but it could be £1,000 or more for those that were disadvantaged.
“Not surprisingly we are seeing really high engagement when contacting former members, with 80% or more responding quickly when contacted. Paying the top-up as cash straight to the individual can simplify the process significantly but robust processes are required given the much higher risk of fraud than if the top up is paid to the original receiving pension scheme.”