Compensation claims grow after guaranteed minimum pension payouts fall short

Some defined-benefits pension schemes have paid the wrong amount of “guaranteed minimum pensions”, leading to a growing number of compensation claims.

Two years after a key ruling, thousands of pension-scheme members may be in line for a windfall – and the number of people due compensation keeps growing. Defined-benefit pension schemes have been working on compensation arrangements for gender discrimination since 2018, when the High Court ordered Lloyds Banking Group to pay redress to scheme members offered different amounts of guaranteed minimum pensions (GMPs) on the basis of their gender.

GMPs are a minimum level of pension that schemes agreed to pay members who opted out of the state earnings-related pension scheme (SERPS) between 1978 and 1997, but benefit calculations were routinely linked to gender for many years on the basis that the male and female state-pension age was different.

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David Prosser
Business Columnist

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.