In the February edition of the E-Bulletin we highlighted the Government's plans to abolish the default retirement age from 1 October 2011. One of the points discussed was an exemption to the principle of equal treatment on grounds of age for insured benefits.

Under this exemption, employers will be able to stop providing insured benefits, including life assurance, from age 65 or, if later, the state pension age.

This may seem like good news for employers however, as death in service benefits can be provided either directly by an employer or by a pension scheme, there are two issues which trustees need to be aware of in the way in which the legislation is drafted:

  • there is uncertainty as to whether the exemption extends to trustees of an occupational pension scheme or only to employers; and
  • the exemption does not apply if insured benefits are stopped at any age other than 65 (or, if later, state pension age).

If the exemption does not extend to trustees then they will need to consider whether they can objectively justify stopping insured benefits at 65. This may be difficult given that life cover is now widely available in the market up until age 75.