Pensions Equality

Antidiscrimination law has had a very significant effect in the context of pensions. See the separate sections on equality legislation. Equality protection legislation protects individuals from discrimination, harassment, and victimization in relation to protected characteristics.

These protected characteristics are age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, religion or beliefs, sex, sexual orientation, and race.

Occupational pension schemes are effectively subject to a non-discrimination rule. Trustees have an overriding part and modify schemes to comply with the non-discrimination principle.

Historically, men and women were treated differently from the perspective of pensions and retirement age. One of the first principles established was equality of access to pension schemes.

The exclusion of part-time workers may constitute indirect sex discrimination on the basis that women tend to work part-time to a greater extent due to child rearing and bearing needs.

Exclusions from memberships that cannot be justified may be invalidated on equality grounds.

The equal pay legislation was extended to cover pensions in the mid-1990s. The equal treatment regulations imposed a cost of funding excluded employee benefits after 1995.

National legislation with limited claims, retrospective elements of claims up to two years, were found invalid by the House of Lords. Claims to the Employment Tribunal of up to six months were upheld.

Other general statutory limitation issues may arise in relation to alleged breaches of implied terms in a contract.

Treating part-timers less favorably may be justified on objective grounds if it can be shown that the less favorable treatment is to achieve a legitimate objective necessary to achieve that objective and an appropriate way to achieve that objective.

Equality legislation applies to benefits and contributions. Actuarial evidence shows that female life expectancy is higher than male life expectancy. The former differential pension age is to be equalized by November 2018 and then increased to 66 and ultimately 68.

The famous Barber case held that pensions were pay and that pensions are to be equal for men and women. After the Barber case in 1990, immediate action was required to implement equalization. The European Court of Justice, in subsequent cases, required employers and trustees to consider three time periods in respect of measures to equalize benefits. The periods are as follows:

• Period up to 1990: Benefits need not be equalized.
• Period from 17 May 1990 to the date when the scheme benefits were equalized: The benefits must be leveled up, increased to the level enjoyed by the advantaged sex.
• After that, scheme benefits were to be equalized.

Benefits may be leveled up or leveled down, and the power to do so may depend on the terms of the scheme. The obligation in Barber applies to trustees and employers, with the primary obligation on the trustees to exercise their powers to observe the principles of equal treatment.

Most schemes have now been updated to reflect equality in retirement terms, survivor benefits, and transfer arrangements, including the equalized normal retirement age.

The above Barber case required scheme amendments if necessary, depending on the terms of the amendment power.

Age discrimination may arise when persons are treated less favorably than others on grounds of age. Indirect discrimination may arise when ostensibly neutral arrangements impact persons in a certain age group more severely. They will be discrimination, whether direct or indirect, if the circumstances are the same or not materially different.

There are a number of exemptions which are relevant to age exemption.

In relation to age-related contributions, in money purchase schemes, different rates must be for the purpose of equalizing resulting benefits in relation to comparable periods of pension services to which members of different ages will be entitled. Member’s contributions for older members may be higher than for younger members to reflect the fact that they have less time to accumulate.

Maximum or minimum ages for admission, including different ages for admission for different groups, may be allowed.

Length of service requirements may be permissible. Up to a five-year period may be allowed for admission or accrual of benefits, any greater period must be shown to fulfill a business need.

Pensions based on service differentials are permissible provided members in a comparable situation accrue a right to a benefit based on the same fraction of pensionable pay.

Final pension salary caps may be imposed, which might be equivalent to former revenue caps. Maximum lengths of pensionable service are permissible.

Targeted benefits exemptions apply where an accrual rate is set to target a pension of two-thirds salary at the normal retirement date. Closure to new entrants may be permissible. This allows sections of schemes to be closed from a particular date.

Schemes may set a specific age as the earliest date at which benefits may become payable without consent or without actuarial reduction. Schemes may provide for a minimum age for the payment or entitlement of benefits prior to early retirement pivot age benefits paid between the minimum age. An ERPA other than on grounds of ill health must be actuarially reduced, and no added years awarded unless the practice can be objectively justified.

Enhancement of benefits on ill health may be enhanced on the basis of future potential service to the normal pension age. Death benefits may be enhanced with reference to prospective service to normal pension age. Enhancement on other bases will need to be justified.

Many schemes require cessation of accrual benefits at the normal retirement date. This may be vulnerable on equality grounds in some instances. If an age-related rule does not fall within the exemptions, it may be justified if it is a proportionate means of achieving a legitimate aim in accordance with the Equality Act 2010. This may include efficiency, business needs, reducing staff numbers, providing promotion opportunities, and retention of good performance.

Where a discriminatory provision is not exempt or otherwise justified, the non-discrimination rule applies until the non-discrimination is eliminated, and the less favored group is to be leveled up to the benefits provided by the more favored group.

Prior to April 2011, employers were permitted to retire employees at the age of 65, provided they followed a particular procedure without justifying the decision. The employment equality repeal of retirement age provision regulations requires that retirement on age be justified following references to the EU court and references back to withstand a retirement age of 65 was legitimate and proportionate.

The Civil Partnership Act requires civil partners to be treated the same way as spouses. It overrides existing legislation. Trustees and employers may be obliged to amend their schemes to give effect to it.

The Gender Recognition Act 2004. A person who is 18 may make an application to a Gender Recognition Panel for a gender recognition certificate. On grant, the person’s gender becomes the acquired gender.

Persons may marry on their acquired gender and be given birth certificates recognizing the acquired gender. A number of cases have arisen in which transsexual persons have asserted rights. The European Court of Justice found a refusal to grant the female retirement age to a transgender persons.