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Pensions: Age Discrimination

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Does a pension scheme automatically include a 'non-discrimination rule' or must an amendment be made by trustees/managers before any rule takes effect?

The inclusion of the non-discrimination rule is automatic, held the EAT in Sargeant v London Fire Commissioner & Others.

Claims were brought be a number of firefighters against their various employers in the form of local Fire and Rescue Authorities ('FRAs'). They argued that the terms of a new pension scheme, introduced in stages up to 2015, were discriminatory on the grounds of age. The 2015 scheme changed the benefits for active employees born on or after 2nd April 1971 so that they were less favourable than for older employees.

This was found to be age discrimination. The FRAs argued on appeal that they had a defence under para 1(1) schedule 22 Equality Act 2010 on the basis that the 2015 pension scheme was set up by central government regulations, and the FRAs had to follow them.

Wilkie J. sitting in the EAT disagreed. He said that s6 Equality Act which created the non-discrimination rule:

"operates by making the non-discrimination rule a part of the scheme by operation of law i.e. by virtue of a statutory provision"

and because the scheme was therefore automatically modified by section 61, the FRAs did not have to follow the central government regulations.

Wilkie J. also decided that, because the scheme managers (the FRAs for each area) were allowed to change the existing scheme rules under section 62, the FRAs were not required to discriminate by the central government regulations. The FRAs could simply change the rules.

Thanks to Matthew Jackson of Albion Chambers for preparing this case summary.