The Employment Equality (Age) Regulations 2006 require employers and trustees of occupational pension schemes to refrain from unlawful discrimination on the grounds of age.
Whilst the Regulations contain a number of exemptions to allow some existing discriminatory practices to continue, they also imply a “non-discrimination rule” into pension schemes. The effect of this rule is to override any discriminatory provisions or practices and “level up” the benefits of any less favoured group to the level of the most favoured group. This levelling up will continue until the discriminatory practice ends.
This is a potentially costly situation for any employer operating a pension scheme, which contains discriminatory provisions, or practices that are not exempted under the Regulations, particularly if their ultimate intention is to “level down” benefits in order to remove the discrimination.
We recommend that all employers carry out an audit of their pension scheme provisions, to assess the extent to which they comply with the Regulations and identify any potential liabilities or necessary amendments.
If you would like to download a PDF outlining some of the key issues for pension schemes, please click the link.
If you would like to discuss any of these issues, or if you would like us to review your current pension arrangements in the context of the new legislation, please do not hesitate to contact one of our pensions team.