UK: Pension Scheme Accrual Rules Did Not Discriminate Against Part-Timer

In Parker v Medical Defence Union Services Ltd and another, the EAT upheld the decision of an employment tribunal that non-uniform accrual rules of a pension scheme did not disadvantage a part-time pension scheme member.

Ms Parker was a member of the Medical Defence Union pension scheme for 27 years. For most of that time she worked part time. The scheme provided that a member who worked full time and had at least 20 years’ service would receive two thirds of their final salary. Members who worked part time would receive an equivalent proportion of their final salary. A member who had worked four days a week would therefore receive 80% of 2/3 final salary. An unusual feature of the scheme rules was the fact that the actual accrual rate depended on the age at which the member joined the scheme. This meant that someone who joined the scheme aged 40 and who worked for 20 years would end up with the same pension as someone who joined the scheme aged 35 and worked for 25 years. Both would receive two thirds of final salary.

Ms Parker had accrued 21 years’ full time equivalent service and so argued that she had been treated less favourably than a member who worked full time and had accrued 21 years’ service. She contended that such a member would receive a higher pension than her (as no part-time percentage reduction would be applied).

An employment tribunal and the EAT dismissed Ms Parker’s arguments on the basis that the correct comparator was not simply a man of the same age retiring on the same date with 21 years’ full time service. Because of the oddities of the scheme rules, the correct comparator in this case was a man of the same age, retiring on the same date with 21 years’ full time service who started on the same date as the claimant. The EAT noted that this comparator would actually receive a lower pension than the claimant.

This case featured a rare pension scheme rule which has now been replaced. However, it is interesting to note the EAT’s approach in this case. Although scheme rules may create apparently unfair results, it is not for the tribunal to intervene to make a scheme fairer. It can only decide whether the scheme rules, or the way they have been applied, involves unlawful discrimination.

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