Question about defined benefits pension and break in service

stevus_uk

I'm hoping I can explain the situation well enough to get advice. So, my wife worked for Lloyds Bank from age 16, eventually leaving around age 36. However, part way through this she was forced to take a break in service due to pregnancy, as, for some reason, she was unable to take maternity leave. So instead of a full 20 years service, she now has 2 periods of service with 2 separate pensions. My question is really to confirm my understanding that a defined benefits pension is based on years of service. So I want to understand if Lloyds forcing her to split her service has had a negative impact on the pension she now has.

A second question is probably not for this forum as I'm just very curious about this forced break, as now it seems very prejudiced and deliberately penalising her for being pregnant and requiring time off to have a baby (my wife is a bit unclear of the details, but it just seems so wrong). 

I'd welcome any thoughts or feedback or advice.

Ayr_Rage

If you leave and rejoin the two employment periods are not linked so your wife having two pensions is correct.

With the greatest of respect, it is highly unlikely that she was forced by Lloyds to leave when she had the child and as you say she is a bit unclear of the details.

How long ago did this happen?

Marcon

stevus_uk said:

I'm hoping I can explain the situation well enough to get advice. So, my wife worked for Lloyds Bank from age 16, eventually leaving around age 36. However, part way through this she was forced to take a break in service due to pregnancy, as, for some reason, she was unable to take maternity leave. So instead of a full 20 years service, she now has 2 periods of service with 2 separate pensions. My question is really to confirm my understanding that a defined benefits pension is based on years of service. So I want to understand if Lloyds forcing her to split her service has had a negative impact on the pension she now has.

A second question is probably not for this forum as I'm just very curious about this forced break, as now it seems very prejudiced and deliberately penalising her for being pregnant and requiring time off to have a baby (my wife is a bit unclear of the details, but it just seems so wrong). 

I'd welcome any thoughts or feedback or advice.

What date did she take a break to have a baby (if you can't remember that, the DOB of your child will do the trick!)? How old was she at the time?

stevus_uk said:

So instead of a full 20 years service, she now has 2 periods of service with 2 separate pensions. My question is really to confirm my understanding that a defined benefits pension is based on years of service. So I want to understand if Lloyds forcing her to split her service has had a negative impact on the pension she now has.

It's correct that she has two periods of pensionable service (and thus two 'separate' pensions) if she had a break in service and when she returned, she did not have the two periods 'linked'. Such linking could either be in her terms of employment, or in the rules of the pension scheme - she'd need to meet the relevant criteria.

The first period will be based on her years of service from the time she joined the scheme (likely to be at least age 18, even if she joined service at 16) to the time she left to have the baby, and the pensionable salary will be based on what she was earning at, or close to, the time she left. 

The second period will be based on her years of service from the time she returned to work until she left at age 36. Assuming she was earning a higher salary when she left for the second time, this salary would be used for her second period of scheme membership.

It's therefore likely that the break in service acted to her detriment, but without knowing dates/salaries it's impossible to be definitive.

stevus_uk

She took the break in 1984, and returned, I believe, in 1985 until around 1996 or 1997. Her original employment would have started in 1977. So taking into account the pension would not have started until age 18 at least, that's 5 years pensionable service, followed by a further approximately 11 or 12 years. 

I'll have to quiz her a bit more about the circumstances of the maternity break.

Flugelhorn

depends on the terms of the pension, sometimes the first bit of service will be treated as deferred and the final salary may be uprated somehow 

Notepad_Phil

stevus_uk said:

She took the break in 1984, and returned, I believe, in 1985 until around 1996 or 1997. Her original employment would have started in 1977. So taking into account the pension would not have started until age 18 at least, that's 5 years pensionable service, followed by a further approximately 11 or 12 years. 

And she may have needed to have been quite a few years older than that before she was able to join - at around that time I joined a well resourced defined benefit pension of a (at the time) very profitable private company, but you had to be 25 before you could be a member, and from memory plenty of my friends had similar ages before they could join their pension scheme.

Marcon

stevus_uk said:

She took the break in 1984, and returned, I believe, in 1985 until around 1996 or 1997. Her original employment would have started in 1977. So taking into account the pension would not have started until age 18 at least, that's 5 years pensionable service, followed by a further approximately 11 or 12 years. 

I'll have to quiz her a bit more about the circumstances of the maternity break.

At some point your wife will have been given written statements of her two periods of pension scheme membership, which will clarify once and for all the respective periods of service she had for each; the 'final pensionable salary' on which the pension was based; and how each period 'revalued' from the time she left to the time she accesses her Lloyds Bank scheme benefits.

The law was very different in the 1980s. Maternity leave varied from one company to another and was linked to length of service. I suspect the maternity leave issue might therefore simply be that she hadn't been employed for long enough to qualify for maternity leave, and thus a break in service was inevitable. 

silvercar

Having taken my first maternity leave in 1990, the law then was that if you didn’t return within a year your contract was ended. So if she wanted to extend her maternity leave by a few more months it may be she was forced to have separate periods of service. It could be that she could have applied to bring her first pension period into the second ongoing one, but either she didn’t do that within the timescale or she did apply and the correct paperwork wasn’t completed. It will be hard to prove either way now, though she may think it worthwhile pursuing this.