Age discrimination laws force changes to pension schemes

The Employment Equality (Age) Regulations were laid before Parliament last Thursday.

As a result of the new Regulations, trustees of occupational pension schemes will be unable to discriminate against any member or prospective member on the basis of age (except in relation to rights accrued before 1st October 2006 and subject to exceptions). Occupational pension schemes will be treated as including a provision requiring trustees to refrain from doing anything that is unlawful under the age discrimination legislation.

The Regulations contain a large number of exceptions for pension schemes, including minimum or maximum ages for admission to a scheme. As far as personal pension plans are concerned, the age discrimination legislation only applies to employer contributions. Again, a large number of exceptions apply.

Simon Tyler, a Senior Associate with Pinsent Masons' pensions team, said: "These regulations are more prescriptive than the draft Regulations previously issued by the DTI. Some occupational pension schemes will need to make amendments to ensure they do not fall foul of the new requirements."

In particular, he said that trustees will need to check whether the benefits provided to members on early retirement fall within the relevant exceptions. "They may need to amend their schemes to change the basis on which those benefits are paid in respect of workers obtaining the right on or after 1st October 2006 to join the scheme," he explained. "In addition, where contribution rates to occupational or personal pension schemes are based on age, employers and/or trustees will need to check that the relevant exception applies."