On 1 March, the European Court of Justice (ECJ) is due to issue its decision in the “Test Achats” case. This test case is about whether insurance companies can charge premiums and provide benefits on a basis which assumes women generally live longer than men. It has been brought by a Belgian consumer protection group.
The preliminary stage of the ECJ process is a recommendation by a legal expert, the Advocate General (AG). In this case, the AG’s recommendation to the ECJ in summary is that it should decide:
- that sex-specific differences in respect of insurance premiums and benefits should be unlawful in future, but
- that this should not be retrospective; and
- that there should be a transitional period of three years to allow the insurance industry to adjust.
This is an insurance case, not a pensions case. However, if the ECJ decision follows the main recommendations of the AG, it will directly affect any pension schemes which insure death benefits or secure benefits by buying annuities.
It may also raise concerns about whether using sex specific factors for providing lump sums out of pension or calculating transfers remains sensible. There is a specific decision which says this is acceptable, and this is reflected in UK legislation (the Equality Act 2010).
However, Trustees may want to start thinking about how they would change factors, and the administration, if the ECJ decision goes further, faster than anticipated.