The High Court decision that the Lloyds Pension Schemes must equalise how Guaranteed Minimum Pension (GMP) is treated got wide press coverage last week, including in the BBC and broadsheets. The High Court has decided that Lloyds needs to change its pension calculations to make up for a complex way in which some members have been treated unequally.
There now follows a long period where Lloyds and thousands of other similar pension schemes work out what to do about it. In the meantime, what will members be thinking and asking?
Inevitably, some are likely to think they are in line for nice boost to their pension. Some may be worried that their pension could go down. Others might think this is another example of the pensions industry ‘getting it wrong’. The reality is somewhat different of course. But who’s going to help members understand what’s really going on?
Gossip loves a vacuum. If schemes say nothing to their members, these thoughts will circulate and be amplified. Members may start asking where their pension boost is. They may hear of the multi-billion cost to schemes and think now is a good time to transfer out of a sinking ship.
So now is the time for schemes to talk to their members. We need to explain clearly and simply what is going on, what the timescales might be, and what members might get out of it. Trustees need to establish themselves as the trusted source of information for members on this issue.
Lloyds trustees have created a twitter-style feed on their member website to show that this is the place to come for the latest news. They’ve posted videos of trustees chatting to members, and lots of FAQs. (Full disclosure: we at Quietroom helped with this work.)
Other schemes don’t have to do it that way, but they need to do something. Or people will talk.