United Kingdom Adopts "Equal Treatment" in Its 1995 Pensions Act and Other Provisions Affecting Women

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One important aspect of the United Kingdom (UK) 1995 Pensions Act (enacted in July that year) is to incorporate "equal treatment" between men and women in legislation to comply with earlier decisions of the European Court of Justice (ECJ) relating to retirement ages and equal compensation for equal work. (See "European Court of Justice Orders Equal Treatment in Awarding Pensions to Men and Women," Social Security Bulletin, Vol. 54, No. 2 (February), 1991, pp. 14-16; and "European Union Striving for Gender Equality," IBID, Vol. 58, No. 2 (Summer), 1995, pp. 78-80.)

As a member of the European Union (EU), the UK must comply with ECJ decisions. In matters of pensions, the key ECJ ruling was the Barber judgement dated May 17, 1990, which decided that occupational (that is, employer-provided) pension plans must allow men and women to retire at the same age, providing them with the equal pensions for equal work. Relevant EU directives and court decisions apply directly to occupational pensions. In the UK these play an important role in income security for the aged. The public old-age pension consists of two tiers: the first tier is a contributory, flat-rate basic pension, and the second tier is a State earnings-related pension (SERPS). The large majority of UK workers have contracted out of the SERPS through membership in occupational pension schemes or personal (defined-contribution) pensions. The new Pensions Act primarily affects those covered by occupational pensions, though it also raises the retirement age for women under the public pension system so that the retirement age is the same as that for men. The equality rule does not apply to personal pensions.

Equal Treatment in Occupational Pensions

Sections 62-66 of the 1995 Pensions Act delineate areas where equal treatment does or does not apply to occupational pensions according to Article 119 of the Treaty of Rome as interpreted by the ECJ. Provisions of the 1995 Act and subsequent regulations became effective January 1,1996. Generally speaking, all occupational pension plans must ensure equality between men and women in terms ol membership and treatment of members. Trustees of pension plans (most occupational pension plans in the UK are established as trusts, legal entities separate from the sponsoring organization or company) are required to amend their plans in accordance with the equal treatment rule wherever applicable. Such amendments have the effect of altering benefits attributable to pension coverage that began before the amendments became effective. The 1995 Act also extends the UK Equal Pay Act of 1970 so that equal-pay requirements apply to pensions. In the absence of an explicit equality rule in the pension plan, equal treatment shall be enforced as part of contracts of employment under the 1970 Act.

Claims that membership in a pension plan has been denied based on the person's sex can be remedied by backdating membership for up to 2 years prior to the date such claims were made. Plans should apply the same retirement age for men and women, and ensure equality with regard to pensions payable to dependents, the benefit formula based on marital status, and the like. Section 63 of the 1995 Act further specifies that for pensions payable, "equal treatment" is applicable retroactive to May 17, 1990, the date of the Barber decision.

Certain exceptions to the equality rule are still permitted in pension plans. For example, when calculating contributions and benefits, pension plans may use different actuarial factors for men and women based on differences in life expectancy.

Generally, the proportion of women who are covered by employer pension plans, and therefore may be affected by the 1995 Act, is smaller than that of their male counterparts. …