28/3/2007 - Age Discrimination

The Employment Equality (Age) Regulations 2006 took effect on 1 October 2006. The pension aspects of the Regulations did not come into force until 1 December 2006 following some final hour amendments.

On 1 October 2006, new requirements under The Employment Equality (Age) Regulations 2006 came into force, as part of the European Employment Directive, which required EU countries to outlaw age discrimination by 2 December 2006. The pension aspect of the Regulations did not come into force until 1 December 2006 because the Government decided to conduct a consultation at the last minute on some further revisions to the pension aspects of the Regulations.

The Regulations make it unlawful for trustees and employers to discriminate on grounds of age. Regulation 11 imposes this duty, whilst Schedule 2 of the Regulations specifically relates to exemptions for occupational pension schemes and personal pension scheme. The Age Regulations do not affect state pension provision.

All schemes are treated as including a non-discrimination rule, which prevents scheme trustees or managers from acting contrary to Regulations, i.e. unlawfully. The non-discrimination rule overrides any discriminatory scheme rules applying to pensionable service from 1 December 2006. In practice, this means that the non-discrimination rule prevails and levelling up will need to take place to ensure that any disadvantaged group is treated the same as the rest of the scheme membership.

The Regulations make it unlawful for employers to discriminate on grounds of age both in general and in relation to pensions. Pension schemes will need to ensure that they do not discriminate against current and prospective scheme members either directly or indirectly as a result of their age. However, there are a number of exemptions provided by the Regulations for many age-based rules in occupational pension schemes.

Schemes with a retirement age below 65 can continue to use an age below this for the date when pension benefits become payable but there will need to be objective justification (i.e. the outcome of it must be to achieve a legitimate aim) for retiring someone before age 65. For occupational pension schemes, a set minimum or maximum age may be used for admitting entry in to a scheme with different ages set for different groups or categories of workers. Amending Regulations have also provided an exemption for a minimum entry age for a Group Personal Pension (GPP).

A scheme may also set a minimum amount of pensionable pay a person must earn in order to gain entry to the scheme. However, the minimum level must not be greater than the lower earnings limit (LEL).

Where an employer pays higher contributions based on age (i.e. age related contributions) then this may continue if the purpose of doing so is to provide equal emerging benefits for members at retirement age.

The Age Regulations have a specific exemption for incapacity pensions based on a member´s prospective service. Amending Regulations have provided a similar exemption for survivors´ pensions to allow a survivor´s pensions to be based on prospective service for a member in receipt of ill health retirement.