Occupational Pensions.
Pension rules largely unaffected:
The new age discrimination laws aim to disrupt
occupational pension arrangements
as little as possible, and to avoid the risk of pension provisions being
reduced.
The regulations apply to occupational pension schemes and employer contributions
to personal pensions. They do not apply to state pensions, which will be
completely
unaffected.
In addition, pension rights accrued before 1st October 2006 will not be
affected.
Key Exemptions:
The regulations exempt a wide range of age-related rules, which typically exist
in
occupational pension schemes. This means that pension schemes can
continue
to operate, by and large, as they do now.
Where an age-based rule is being used as part of an existing pension
scheme, and
there is no exemption for it in the regulations, employers will have the option
of
objectively justifying it. If the rule cannot be justified, the employer
can change it, or if
they cannot do so - get rid of it.
An exemption in the regulations allows pension schemes to be closed to new
employees. This means different pension arrangements can be offered to
existing
employees and new joiners. For example, a firm may offer a
defined contribution scheme for new employees while
existing staff remain in a defined benefit scheme.
Nothing in the regulations will undermine the way that defined benefit schemes
operate.
Age-based contributions to pension schemes can continue if they are aimed at
producing
an equal outcome in pension benefits.
Employees can also continue to apply minimum and maximum age limits for
membership to pension schemes.
Employers will not be able to set a maximum age for contributions to a pension
scheme,
but will be able to set a maximum number of years of pensionable service.