Introduction (Tranche 2)
We recently wrote to a second tranche of pensioners in the Leonardo Helicopters Pension Scheme (the Scheme) about some changes we are proposing to make to your pension.
The changes are linked to the Guaranteed Minimum Pension (GMP) part of your pension and a project called ‘GMP equalisation’, which all pension schemes like ours have to carry out.
The consultation will run from 15 May until 15 June 2023.
What is the consultation about?
Following the outcome of a High Court legal case, all UK pension schemes whose members have GMPs have to make sure that no one has a lower pension as a result of their sex – a process called ‘GMP equalisation’.
One of the ways we can achieve equalisation is to convert all GMPs in the Scheme into non-GMP pensions; this is called ‘GMP conversion’.
GMP conversion allows us to address this historical inequality, but it also gives us an opportunity to simplify Scheme pensions.
In addition, if the changes go ahead as proposed (following any feedback as part of this consultation), eligible members will be given a one-off choice in how their pension changes and will be able to receive paid-for financial advice to help them make their decision. They will be able to choose between Pension A and Pension B:
Your pension will automatically change to a simpler Scheme pension that addresses the historical inequality and will still increase broadly in the same way that it does today. Compared to your current Scheme pension, the amount and expected overall value of your Pension A option will not go down.
The Company, in agreement with the Trustee, also wants to offer you an alternative option.
Pension B would be simpler, as described for (Pension A), but with an immediate, one-off increase to the amount of your pension. In return for this, you would receive lower (or no) increases to your pension in the future. This is known as a ‘pension increase exchange’ (PIE) option.
The one-off increase would give you a higher pension now than Pension A, but with lower (or no) increases in the future. This would be worked out after the effect of addressing the historical inequality (your Pension A).
Please note: Pension B will be available to eligible members only and eligibility will only be determined once we have addressed the historical inequality in your current pension.
If, following the outcome of the consultation, you decide not to take your Pension B option, you’ll automatically receive Pension A from February 2024.
OUTCOME OF THE CONSULTATION
After considering the comments and feedback through the consultation window the Trustee and Company have decided to proceed as planned. We will shortly be writing to those impacted members, along with those who have opted to receive a PIE offer (Pension B), with confirmation of the outcome and the next steps.