Lloyds Banking Group Pensions Trustees Ltd v Lloyds Bank Plc & Ors

For GMP conversion under sections 24A to 24H of the Pension Schemes Act 1993, the actuarial equivalent may be calculated by comparing the actuarial equivalents of the unequalised male and female pensions. The actuary need not first calculate the actuarial equivalent of benefits equalised under another method. The choice of actuarial assumptions, including interest or discount rates, is for the actuary unless the court has fixed an assumption for a particular equalisation method. Statutory GMP conversion, when carried out in accordance with the statutory conditions, is not itself a method of equalising benefits and cannot be opposed on the ground that it interferes with existing rights.

This was a consequential judgment following the court’s earlier judgment of 26 October 2018, reported at [2018] EWHC 2839 (Ch). The court considered the form of the order concerning Method D2, a method involving GMP conversion under sections 24A to 24H of the Pension Schemes Act 1993. The issue was whether Method D2 required benefits first to be equalised using Method C2, so that the actuary would calculate the actuarial equivalent of the equalised pension, or whether the actuary could compare the actuarial equivalents of the unequalised male and female pensions.

1. Order concerning Method D2. The court ordered that the draft declaration should be made without the proposed words requiring benefits first to be adjusted under Method C2. Method D2 was not presently available because the Banks had not consented, as required by section 24E(2) of the Pension Schemes Act 1993. In principle, however, Method D2 was a lawful method to which the Banks could consent.
2. Calculation of actuarial equivalents. Method D2 initially operated in the same way as Method D1. The actuary was therefore to calculate the actuarial equivalent of the pre-conversion benefits under section 24B by reference to the unequalised female pension and the unequalised male pension. The higher actuarial equivalent was then to be used for GMP conversion. It was unnecessary first to determine the actuarial equivalent of the pension after equalisation under Method C2.
3. Actuarial assumptions. The determination of the actuarial equivalents, and the assumptions used for that purpose, were matters for the actuary. The interest rate previously fixed by the court for the worked illustration of Method C2 applied if Method C2 was adopted, but did not bind the actuary if Method D2 was adopted instead.
4. Nature of GMP conversion. The statutory process was not itself a method of equalising benefits. It removed scheme terms referring to GMP in accordance with the statutory conditions. Where those conditions were satisfied, conversion was authorised by statute and could not be opposed on the ground that it involved interference with members’ rights.

The court rejected the submission that Method D2 necessarily required prior equalisation under Method C2 and made the order accordingly.

This was a consequential first-instance judgment following the court’s earlier judgment of 26 October 2018, reported at [2018] EWHC 2839 (Ch).