The Employment Equality Acts 1998 to 2004 do not extend to pension rights, hence the need for this gap to be plugged. This was done earlier this year, via the Social Welfare (Miscellaneous Provisions) Act 2004 and the Equality Act 2004, both of which made changes to Part VII of the Pensions Act 1990. For historic reasons these changes apply to "occupational benefits", an expression that encompasses pensions rights.

As in the case of employment equality laws generally, there are now nine equality grounds in the case of occupational benefits. They are: gender, family status, marital status, sexual orientation, age, religion, disability, race and traveller status.

If there is failure to provide equality on these grounds, the offending rule is rendered null and void and the employer (and / or trustees of the plan) is required to level-up benefits to the date the rule is equalised.

If access to an arrangement is at the discretion of an employer (or other person), this discretion has to be operated in accordance with the "principle of equal pension treatment". This provides that there shall be no discrimination on any of the discriminatory grounds, including indirect discrimination, unless objectively justified in respect of a rule of an "occupational benefits scheme". (An arrangement that covers occupational pension schemes and other arrangements such as PHI policies.)

The discriminatory grounds had previously been confined to gender and the mixture of family and marital status. It was appreciated that these grounds would, in line with applicable EU directives, be extended. However, there had been a concern as to how the new regime would affect 3 particular areas: age, marital status and disability.

Pension schemes, of their nature, are ageist. (E.g. Revenue rules dictate normal retirement age must be between 60 and 70; also, it is acceptable employment practice for employers to fix entry ages into pension schemes at anything from 18 to 25.)

It is interesting to see how the age ground is implemented in the pension landscape.

The concern was: would the age ground interfere with the effective running of a pension scheme? It seems not. Whilst the general rule is that there can be no discrimination on grounds of age (described as any age above that at which a person is required to attend school), there are a considerable number of exceptions, which means that this ground is likely to be easy to operate in practice.

Provided there is no breach of gender equality it is possible to set the age or a qualifying service period (or both) for a range of features. Either, or both, may be a qualifying condition for entry to a pension scheme, entitlement to benefits, or accrual of rights under a defined benefit scheme, or in relation to the level of contributions to a defined contribution scheme for a single employee, or, as regards groups, provided this is appropriate and necessary by reference to a legitimate objective of the employer, including legitimate employment policy, labour market and vocational training objectives.

Employers may operate a defined benefit plan for an older employment population and a defined contribution plan for a younger one provided this is appropriate and necessary by reference to its legitimate business objectives. But, it is up to the employer to get this structure right as the onus will be on it to prove that it is in compliance with the regime should a case be taken against the employer.

Looking then at the marital status ground, existing practice confers better death-in-service benefits on married members of a pension scheme. The issue was: would the new regime preserve this position or would the sexual orientation ground extend this practice for same sex partners?

The status quo is maintained and there is no extension for same sex partners.

The new legislation expressly enables more favourable benefits to be provided on the death of a member in favour of his or her spouse provide no discrimination on gender grounds arises. The legislation is clear that in the latter case this will not be regarded as a breach of the sexual orientation ground.

However, it is becoming increasingly likely that, in the future, equality legislation will require the recognition of same sex partnerships and enable these to enjoy the same benefits as marital ones do at present. A series of UK court cases tend to this conclusion. There, the matter is still the subject of litigation but commentators believe that this position will change either as a result of a pronouncement of the European Court of Justice or, perhaps, due to moves by the EU Commission.

As regards disability, the approach taken by the legislature is a fair and sensible one. Impliedly, positive discrimination in favour of the disabled is permitted. It is also possible to provide lesser occupational benefits on the grounds that the person with the disability is unable to have the same work output as a person without that disability. This augurs for a fair pro-rating of benefits.

It is usual for a pension scheme to enable a member to take early retirement on the basis of disability. It had been wondered how the new regime would deal with such situations. For example, would there have been the need to offer equivalent early retirement terms for those without a disability, silly though that may seem? Sensibly, the legislation enables such early retirements without any need for levelling up or requirement to provide parity of benefits for those without a disability.

Previously, individuals had no route to enforce their rights so if their employer or the trustees failed to grant equality the legislation afforded no method of enabling the enforcement of rights infringed. The new regime addresses this.

The new regime adopts the same language as the Equality Act, 2004 to describe what constitutes discrimination. Where it departs from general employment laws is that when bringing a claim there is no onus, it appears, on the claimant to establish any type of comparator or person who is, or was, in the employment (even on a notional basis) and is in receipt of the benefits being denied to the claimant. Instead, the claimant needs to point to someone in a "comparable situation". The legislation offers no guidance on what this expression encompasses.

Like employment equality laws in general, once a prima facie case has been established the burden shifts to the respondent to disprove the alleged discrimination.

All claims now must be generally referred to the Equality Tribunal. Previously, the Pensions Board had a jurisdiction to opine as to whether or not a rule of a plan was discriminatory, whereas Equality Officers had a jurisdiction to determine if somebody had been denied access to a plan on discriminatory terms.

In overall terms, the new legislation is very detailed and imports a substantial range of provisions from the Employment Equality Acts 1998 to 2004.

In practice, it is rare to see a rule of a pension scheme that is explicitly in breach of the principle of equal pension treatment. Where an employer has discretion to extend the benefits of a plan to anyone amongst its workforce it must be careful to make sure that it exercises this discretion in a lawful manner and in compliance with the principle. Employers are aware of the nine equality grounds in general terms and, therefore, this updating will not offer them any surprises. Where they need to be cautious is in the area of discretionary access to pension and PHI arrangements.

October 2004.

For further information please contact Fiona Thornton or Gillian Dully.