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Pension Schemes and Equality

Volume 504: debated on Thursday 28 January 2010

In the Barber judgment of May 1990 the European Court of Justice ruled that, as occupational pensions are a form of deferred pay, scheme rules must treat men and women equally. The UK Government incorporated this obligation into domestic law in the Pensions Act 1995. A similar obligation was placed on the Pension Protection Fund in the Pensions Act 2004 in relation to PPF compensation. In line with the understanding of the ECJ judgment at the time, these provisions apply only where there is a comparator– that is, where more favourable treatment has been afforded to an individual of the opposite sex engaged in comparable work.

As part of the work relating to the draft Financial Assistance Scheme (Miscellaneous Amendment) Regulations recently laid before the House, the—Government have been preparing guidance for trustees who are preparing to transfer their scheme assets to Government. As part of that work, the Government have considered whether further practical guidance on equalisation for these transferring schemes is desirable, to ensure that payments of assistance do not discriminate between men and women.

The examination of the relevant legislation and case law has led the Government to conclude that where a scheme member has accrued entitlement to a guaranteed minimum pension after May 1990, European law requires that any inequality in scheme rules which results from the legislative provisions governing GMPs should be removed, whether or not a person can show that a comparator exists.

The Government intend to bring forward amending legislation when Parliamentary time allows. However, in the meantime, it is the Government’s opinion that, in order to ensure full compliance with European law, trustees and others should act as if existing domestic legislation requires equalisation in respect of differences resulting from GMPs whether or not real comparators exist.