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Employer  >  Trustee Zone  >  OPS Matters  >  Flexible Retirement and Age Discrimination - the consultation has started

Flexible Retirement and Age Discrimination - the consultation has started

'Flexibility' was, if you remember, supposed to be introduced by The Finance Act 2004 but few pension schemes have fully embraced the legislation and continue to operate under their existing scheme rules at least in part due to doubts over how Age Discrimination interacts with flexibility in retirement.

Interaction with age regulations

The Employment Equality (Age) Regulation 2006, effective from 1 December 2006 left many employers, trustees and managers of Occupational Pension Schemes confused and reluctant to implement flexible retirement policies which may be deemed discriminatory, either now, or in the future as cases come to employment tribunals or court. Such discriminatory practices can be exempted from the Age Discrimination Laws under the Regulations or may be 'objectively justified' but the costs involved in proving this justification can be high and there's no guarantee that a tribunal or court would agree with such justification.

As a result, despite Age Discrimination Guidance for pension schemes issued by the DWP and the Department of Business, Enterprise and Regulatory Reform (BERR - yes, really - it was previously the Department for Trade and Industry, DTI), the DWP has received lots of requests for guidance on what may or may not be deemed discriminatory.

The main concerns

Although there are a number of exemptions for pension schemes under the Employment Equality (Age) Regulations and the 'objective justification' route can be used, feedback from the industry suggests there are a number of issues that continue to arise. Two areas in particular have been identified by the DWP:

• The interaction between the Age Regulations and the increasing desire to allow workers some flexibility in how they work as they approach retirement - for example, taking benefits whilst continuing to work
  
• The provision of death benefits beyond a scheme's Normal Pension Age (NPA).

Addressing the issues

The DWP freely admit that due to the complexity of all the different scheme rules and practices that exist in UK pension schemes, they can't commit to offering any solutions and cannot issue any guidance either without fully understanding the issues in the first place.

What now?

As a result, the DWP have launched a consultation which is aimed at those who are actually experiencing the problems associated with flexible retirement and Age Discrimination and in some cases, how they have resolved these. The consultation itself is effectively a questionnaire asking the pensions industry the practices or rules they have put in place that they believe aren't discriminatory and those that they think are discriminatory. The consultation period runs from 1 October until 7 December 2007 and at the end of it, it's hoped that further guidance will be forthcoming on the issues that cause difficulties for employers, trustees and scheme managers.  Once we know the Government's findings we'll let you know the finer detail and how this could affect you.

You can have a look at the whole consultation and contribute to it if you like here.

A quick reminder

Take a look at what we have already said about Age Discrimination here and here.