In a surprise appeal ruling, the European Court of Justice recently decided that the use of sexbased actuarial factors when calculating pensionable service on scheme transfers is discriminatory. In Lindorfer v EU Council, it was successfully argued that the sex discrimination that resulted from applying different actuarial factors for men and women to calculate transfer credits could not be justified on the grounds of ensuring the scheme’s long-term financial security. On the particular facts of the case, the ECJ took the view that “unisex” actuarial factors could have achieved the same outcome whilst avoiding discrimination. This judgment is at odds with the earlier ECJ case of Neath , which has hitherto provided authority for using sexbased actuarial factors when calculating transfer values or lump sum commutations.
The Lindorfer case related to an employee of the Council of the EU and arose in part out of the EU’s own specific Staff Regulations. It is therefore possible to take the view that the judgment turned very much on its own facts and has only narrow applicability. It also seems from the judgment as though the ECJ does anticipate circumstances in which the use of sex-based factors would be justifiable. However, this is all far from clear, and schemes which use sexbased actuarial factors on transfers may wish to review their practice and seek advice. Cautious trustees may, for example, decide to refuse transfers in to their scheme where sex-based factors have been used, unless an indemnity is forthcoming to cover against any resulting liability.