A new age of equality

Introduction

The Equality Act 2010 (the Act) was one of the last “acts” of the outgoing Labour administration. It takes a huge step towards harmonising existing discrimination legislation, such as equal pay and age discrimination laws. Once it comes in force, it will provide a single approach to discrimination issues wherever possible.

In this Alert:

• Key points
• Keeping it equal
• Age Discrimination
• Disability Discrimination
• When will the Act come into force?

Key points

• Trustees must ensure that a pension scheme is not operated in a way that discriminates against a member (or prospective member) on any protected grounds.
• Although there should be minimal changes for occupational pension schemes when the Act comes into force, it is a useful opportunity for schemes to check their compliance.
• The pensions exemptions for age discrimination have not yet been published.

Keeping it equal

Trustees must ensure that a pension scheme is not operated in a way that directly or indirectly discriminates against a member or prospective member on any protected grounds, such as someone’s sex or age. This will not change when the Act comes into force. It will still be possible to objectively justify indirect discrimination if it is a “proportionate means of achieving a legitimate aim”.

Trustees will have power to amend their scheme by resolution in order to comply with the Act’s requirements if, for example, they lack the power to amend their scheme or amendments would be unduly complex.

Discrimination legislation has been introduced piecemeal over recent years and only benefits accrued since the specific anti-discrimination law came into force are protected. For example, the Age Regulations only apply to benefits accrued since 1 December 2006. The Act does not disturb this approach.

Age Discrimination

Under the Act, age discrimination will remain the only area where both direct and indirect discrimination can be objectively justified. Currently schemes also benefit from a list of operational exemptions set out in the Age Regulations. These will be repealed when the Act comes into force. Given the hard work required to arrive at these exemptions, we hope that the Equality and Human Rights Commission’s draft guidance which states that “it is possible that the exceptions relating to age will be based on those previously applied” is correct.

In addition, the Coalition Government has pledged to scrap the default retirement age of 65 (hardly surprising since the criticism it received in theHeyday case).

Disability Discrimination

Current disability discrimination laws require schemes to make reasonable adjustments for disabled persons, as well as prohibiting direct and disability-related discrimination. The Act introduces the concept of indirect disability discrimination.

For pension schemes, indirect discrimination is likely to apply in situations where disability-related discrimination would currently apply. The main change is that at present such acts may be possible to “justify”, but this will move to the tougher test of objective justification as part of the harmonisation exercise. Trustees will need to look to this test, for example, if their rules limit death benefits by what can be insured.

When will the Act come into force?

Labour had planned for implementation to commence in October 2010. But the Government Equalities Office has recently withdrawn this timetable from its website, leaving a question mark over implementation.