The Equality and Human Rights Commission (EHRC) has issued guidance on the new Equality Act 2010.
The Equality Act 2010 will, among other things, consolidate and amend the current legislative prohibitions against pension schemes discriminating. Broadly, the Equality Act 2010 will imply a non-discrimination rule into schemes for protected characteristics, for example age, disability, sex and sexual orientation. The Act is not yet in force.
The EHRC states that, in its view, to comply with the new legislation:
“an occupational pension scheme must make reasonable adjustments to any provision, criterion or practice in relation to the scheme which puts a disabled person at a substantial disadvantage in comparison with people who are not disabled.
The rules of an employer’s final salary scheme provide that the maximum pension receivable is based on the member’s salary in the last year of work. Having worked full-time for 20 years, a worker develops a condition which leads them to reduce their working hours two years before their pension age. The scheme’s rules put them at a disadvantage as a result of their disability, because their pension will only be calculated on their part-time salary. The trustees decide to convert the worker’s part time salary to its full-time equivalent and make a corresponding reduction in the period of their part-time employment which counts as pensionable. In this way, their full-time earnings will be taken into account. This is likely to be a reasonable adjustment to make.”
The ECHR’s guidance is available on their website: http://www.equalityhumanrights.com