The parts of the Employment Equality (Age) Regulations 2006 that apply to pension schemes came into force on 1 December 2006.
The Regulations prohibit age-related discrimination and harassment, allowing discriminatory treatment only when it can be proven by the employer to be a proportionate method of pursuing a legitimate business aim. This protection is now extended with regard to pension benefits accrued or payable after 1 December 2006. The Regulations also empower the trustees and managers of occupational pension schemes to alter the scheme rules to ensure compliance with the Regulations.
There are exemptions to the rules which affect a variety of areas. For example:
- minimum pay levels for entry to occupational schemes are permitted;
- a reduced spouse’s pension is allowable on the grounds of discrepancy in age;
- maximum levels of pensionable service can be set for the purposes of calculating the pension paid;
- age and service related benefits are allowed if the aim is to maintain the value of pension benefits for older scheme members;
- age related contributions to money purchase and defined benefit schemes are permitted if the aim is to provide more equal pensions and to pay for member benefits respectively; and
- salary related pension rates and contributions are permitted.
There are special rules for dealing with pension increases for pensioners over 55 years of age and for ‘bridging pensions’ for men aged between 60 and 65 years of age.
The Regulations also apply to employer contributions to personal pension schemes, with exemptions similar to the above.
Pension scheme trustees who have not already done so should take immediate steps to audit their scheme rules and make such changes as are necessary to ensure that these comply with the Regulations. Where there is an age-based rule, they should take advice as to whether it meets the necessary criteria for exclusion from the Regulations by virtue of being a proportionate response to a legitimate business aim. Failure to comply with the Regulations as regards pensions creates the risk that scheme benefits will be ‘levelled up’ as appropriate from 1 December 2006, which could prove to be very costly indeed for the