European Union: Equalisation Of Retirement Ages: Safeway Loses The Argument On Backdating

Last Updated: 15 March 2016
Article by John Hanratty

Many schemes are still grappling with the issue of the equalisation of retirement ages between men and women. The legal position was largely confirmed in 1991 in a suite of cases before the Court of Justice of the European Union (CJEU). However, problems are still emerging with how equalisation was dealt with and documented by pension schemes in the aftermath of those cases.

Last month, in Safeway v Newton, the High Court looked at the issue of when equalisation changes should take effect. The judge, Warren J, was asked to review his own decision on a similar point in Harland and Wolff v Aon  made in 2006. The key outcome of the case is confirmation that the amendments to the Safeway scheme to achieve equalisation could not be made retrospectively, even where the amendment power had a provision to back-date an amendment to a specific point in time. This is consistent with the decision in Harland and Wolff and with previous CJEU case law.

The effect of the decision on the Safeway scheme is that benefits must be based on a normal pension age (NPA) of 60 for both men and women in relation to pensionable service between 17 May 1990 and 1 May 1996, after which an NPA of 65 will apply. Press reports suggest that this could cost Safeway (now owned by Morrisons) £100m. Safeway has been granted leave to appeal and, we understand, will be appealing.

Looking in a little more detail at the decision, the main question was whether the equalisation of NPA from 60 for women and 65 for men to 65 for all was effective from 1 December 1991 when a letter was sent to members (the Letter), or from 2 May 1996 when the change was first included in a deed of consolidation (the Deed).

The scheme had a quite unusual amendment power, allowing amendments to take effect from the date specified in the deed of amendment "which may be the date of such deed or the date of any prior written announcement to Members". Safeway argued that the amendment power was a "split" power and that the Letter was sufficient to effect a valid amendment subject to it being ratified by the Deed. If that argument failed, then Safeway proposed that the Deed could validly effect the amendment retrospectively. This would require Harland and Wolff to be distinguished. 

Held that:

  • the Letter did not of itself amend the NPA of women to 65. It would only take effect on the execution of a deed (although under domestic law as it then stood, that deed could be retrospective to the date of the Letter);
  • the Letter was not sufficient to comply with EU equalisation requirements (so EU principles did not operate to level the NPA down to 65 in December 1991) and the point in time that equalisation did take place was when the Deed was executed; and
  • under EU law the amendment could not be retrospective and the Deed was effective to equalise NPA at 65 only from 2 May 1996.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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