An unusual case in the Employment Tribunal has raised the potential for claims for age discrimination in respect of service before 1 December 2006 (when age discrimination legislation was introduced), where the discriminatory practice does not come within a specified exemption.
Pension schemes routinely discriminate on grounds of age: younger members contribute to pensions and accrue benefits, but cannot (usually) draw those benefits until they reach normal minimum pension age or the minimum age in the scheme rules. Discrimination of this sort is not unlawful, thanks to widespread exemptions in regulations.
Article 3(b) of the Equality Act (Age Exceptions for Pension Schemes) Order 2010 exempts benefits in respect of pensionable service before 1 December 2006 from claims for unlawful age discrimination. However, the Tribunal has found that Article 3(b) is incompatible with the European Framework Directive and so must be disapplied, raising the prospect of historic age discrimination claims. This should not affect the majority of benefits payable from schemes, which will still fall within a specified exemption.
Nevertheless, the case raises concerns that other benefits not within an exemption may be the subject of challenge in respect of pre-December 2006 pensionable service. Caselaw concerning guaranteed minimum pensions (GMPs) suggests that no limitation period would apply in a claim against a funded scheme, meaning that trustees could not rely on the passage of time to defeat a claim. (The situation with schemes which have bought out, and therefore have no assets, may be different – arguably, a six year limitation period may apply.)
We understand that the DWP may appeal the decision. At present, it is gathering evidence on the extent to which pension schemes may be affected and a number of our clients have been asked to complete questionnaires. Alongside other industry stakeholders, we are involved in assisting the DWP.