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Employer  >  Trustee Zone  >  OPS Matters  >  Latest news on amendments to the Age Regulations

Latest news on amendments to the Age Regulations

On 11th October 2006, the DWP published their draft amendments to the age discrimination regulations for pension schemes.

According to the DWP, there was a risk that a lack of clarity in the original regulations would present too great a risk to employers and trustees with the result that schemes would ‘level-down’ benefits or close altogether.

So these amendments are designed to clarify those bits of the Regulations in an attempt to prevent the ‘levelling-down’ of benefits and scheme closures.

The general consensus seems to be that the consultation (all 9 days of it!) and subsequent amendments are welcome as they do offer clarification, for example:

• early retirement – the original regulations seemed to allow schemes to require consent for early retirement for members in one age bracket but not others in another age bracket. This could have be interpreted as indirect discrimination but the amendments make it clear that a consent requirement based on age is in fact allowed

• group personal pensions – there was some doubt that age-related contributions (as long as equivalent emerging benefits ensued) may not be exempt even although there did appear to be a specific exemption in the original regs. The amending regulations introduce new exemptions:- an employer can make equal rates of contributions for all workers, irrespective of age, set an earnings cap for contributions and specify a minimum age for employer contributions

However there are still areas which will require clarification. In particular scheme rules or practices which give different accrual rates depending on when members joined the scheme. There may also be discrimination if the scheme rules have not been updated to remove pre A-Day Revenue limits as different limits could apply depending on whether the member joined the scheme before or after A-Day.

What should be done?

Again, it’s important to try to identify those parts of the rules and/or pratices which could be seen as discriminatory. A review of the rules/practices should be undertaken in conjunction with a legal adviser. Note that although the date of commencement for the regulations as they relate to pension schemes is still 1 December (delayed from 1 October), many in the industry still feel this is little time to get things sorted out.

Further information:

The DWP consultation paper on the amending regulations has a useful summary of what they try to achieve.

The DTI guidance on how the regulations impact on pension schemes will be updated in due course.