UK: Back To Basics: Age Discrimination And Pensions

Last Updated: 13 December 2016
Article by Ruth Ormston

1 December 2016 marked the 10 year anniversary of legislation which set out the various age discrimination exemptions applying to pension schemes.

Here we set out to bust some of the most popular myths that have arisen when it comes to age discrimination. We also cover what you can't afford to miss when it comes to administering pension scheme benefits.

Age discrimination in general - a refresher

Age discrimination legislation in employment was introduced in the age discrimination regulations 2006 ("age regulations"), which came into force at the beginning of October that year, and have since been consolidated, along with other strands of discrimination legislation in the Equality Act 2010 ("Equality Act"). The obligation to legislate against age discrimination stems from European law.

The legislation in the UK prohibits:

  • Direct discrimination (where an individual is subjected to less favourable treatment because of their age)
  • Indirect discrimination (where a provision, criterion or practice puts an individual of a particular age/age group at a particular disadvantage when compared with others not in that group)
  • Harassment (where an individual is subjected to unwanted conduct relating to their age, which has the purpose or effect of violating their dignity, or creating an intimidating, hostile, degrading, humiliating or offensive environment for them).
  • Victimisation (where an individual is subjected to a detriment because they have done, intend to do, or are suspecting of intending to carry out, a protected act (e.g. bringing a discrimination claim)).

Unlike the other forms of discrimination covered by the Equality Act, both direct and indirect age discrimination are capable of being objectively justified. This means an indirect or direct act will not be unlawful if it can be shown that it is a proportionate means of achieving a legitimate aim.

But more on that later...

Isn't age discrimination just an employer problem?


The Equality Act inserts a non-discrimination rule into occupational pension schemes. This deems the scheme rules to include a provision which means that a responsible person (each of the trustees, the scheme manager and the employer) will not discriminate against another, in:

  1. carrying out their functions; or
  2. harassing or victimising another

in relation to the scheme.

This means that benefits must be levelled up if that is the only way the trustees or managers can give effect to not discriminating on the basis of age without infringing the rules of the scheme. This applies to benefits accrued after 1 December 2006.

Insurance providers are also under an obligation not to discriminate against individuals in the provision of their contract based pensions/ or death in service cover.

The obligation not to discriminate therefore falls on all those who manage occupational or personal pension schemes.

But isn't age discrimination always likely where pensions are concerned?

Yes, to some extent that's right; To strip out any element of differential treatment based on age from a benefit structure which is geared towards providing an income for individuals at the end of their working lives would be nonsensical.

This was recognised at the time the age discrimination legislation governing pensions was introduced. There is a set of statutory exemptions which apply to certain provisions and practices within pension schemes. These exemptions cover the majority of apparently age discriminatory practices in occupational schemes, including:

  • Length of service exemptions applying to admission or benefits;
  • Minimum or maximum ages for admission to a scheme, including different ages for different groups or categories of workers
  • The use of age criteria in actuarial calculations;
  • Age-banded contributions in a money purchase scheme where the aim is to make equal or more nearly equal pensions for workers of different ages (with the same salary and length of service);
  • Imposing an earnings cap (on benefits or contributions);
  • Certain enhanced benefits on ill-health, redundancy and death.

These exemptions mean that the practices listed above would not be age discriminatory. However, they would still need to be assessed against other legal requirements, for example an employer's automatic enrolment duties to enrol workers of a certain age into a qualifying pension scheme.

So if there are exemptions that apply to pension schemes, as a trustee or employer, we are protected from age discrimination challenges?


There are not exemptions for every type of potentially age discriminatory practice in relation to an occupational pension scheme.

For example, having a cut-off age for ceasing accrual (e.g. 65) is not covered by a specific exemption. This was not so much of an issue in 2006, when a statutory retirement age of 65 neatly aligned with the retirement age used by many occupational pension schemes. However, now the statutory retirement age has gone. Employees are working longer, and trustees and employers need to consider whether their pension schemes rules and practice need updating to reflect this.

Another fairly commonplace rule which is not covered by an exemption is what is sometimes referred to as a "golden rule", whereby an individual in an occupational pension scheme qualifies for an unreduced benefit after reaching a particular age and length of service.

To ensure those rules are not unlawful age discrimination, trustees and employers would need to examine whether or not they were capable of being objectively justified.

So if we can't rely on an exemption, can't we just objectively justify a rule?

In considering whether or not a rule or practice is capable of being objectively justified, a court or tribunal would want to see the evidence in place to support that conclusion. This is not just a rubber-stamping exercise, and each case will be specific to its facts.

Objective justification is a two-limb test it requires the employer and/or trustees to show that:

  1. there is a legitimate aim behind the rule or practice; and
  2. that the rule or practice is a proportionate means of achieving that legitimate aim.

It is often the second part of this test that employers fall down on. Cost alone will be insufficient to establish objective justification.

Is there anything else we need to know about?

Plenty! But we leave you with this...

As well as the exemptions listed above, there is a specific exemption contained in the Equality Act that applies to insured benefits. This was introduced following the abolition of the default retirement age in 2011, and stemmed from a concern amongst employers that they would be exposed to large premiums and costs in insuring benefits for an ageing workforce if there was no cut-off age at which it would be permissible to stop providing insured benefits.

The exemption means that it will not be age discriminatory for an employer to stop providing insurance cover in respect of an employee once they have reached the greater of 65 or state pension age.

This is likely to be of assistance to employers who insure their death benefits. The exemption does not, however, explicitly cover trustees. We expect that trustees would be able to 'piggy-back' onto the employer's defence provided in the exemption, but this has not been tested in case law to date.

The statutory exemption is also likely to be narrowly construed. This means any provision ending at an age which is not 'the higher of 65 or state pension age' (for example, age 70) would not fall within the exemption, and would need to be either amended, or objectively justified if it were to be maintained.

So what should we do?

Establish your own 'golden rule' by auditing your pension scheme(s) against the legislation and monitoring any developments in case law. We will be publishing a 'top tips' sheet for employers and trustees in our next insight article, so watch this space...

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
22 Nov 2017, Seminar, Montreal, Canada

Please join us on Wednesday, Nov. 22 for a breakfast seminar featuring a panel of experts who are abreast of the most recent developments in the field. Also featured will be Paul Allard, president of Impak Finance, who launched the first cryptocurrency offering under the traditional financial regulatory framework.

29 Nov 2017, Seminar, London, UK

Join us at 4 More London for this breakfast seminar on Wednesday, 29 November 2017 to gain a greater understanding on this debate. Coffee and breakfast will be from 08:30 with the discussion commencing at 09:00. We will finish and have you on your way by 10:00.

7 Dec 2017, Seminar, London, UK

Would you like the opportunity to hear more about the potential disruptive effect that blockchain is going to have in the energy sector? If so, please join us on 7 December where Jo-Jo Hubbard, a leading light in this area, will explain all.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.