In January 2022, an Employment Tribunal (ET) upheld a claim by members of a pension in PPF assessment that by reducing and/or capping their pension payments as required under the PPF legislation, the trustee had discriminated against them because of their age. 

 

PPF compensation rules provide that members below normal pension age at the scheme’s PPF assessment date will have their benefits reduced by ten per cent. The ET’s decision therefore cast doubt over the validity of this “temporal limitation” in UK law which allows a general prohibition on age discrimination to pensionable service before December 1, 2006. The scheme members bringing the challenge all ceased pensionable service before December 1, 2006. 

 

The ET held that the temporal limitation in respect of age discrimination was incompatible with EU anti-discrimination law. On October 27, 2022, the EAT overruled the ET decision, although it did agree with the reasoning behind the ET’s finding that the temporal limitation was inconsistent with the EU Equal Treatment Framework Directive. However, the EU (Withdrawal) Act 2018 means that the temporal limitation could be disapplied only in relation to claims brought before December 31, 2020, when Brexit was implemented.

 

Of the many claimants, only two had brought their cases in time and were able to rely on EU law to continue their claim. For the other claimants, the EAT found that those rights were no longer available under UK law at the time the claims were brought.

 

Had the EAT upheld the ET’s decision, schemes may have had to re-examine their benefit structures for any age discrimination relating to periods of pre-December 1, 2006, pensionable service. As such, the EAT’s decision will be a relief to the DWP and PPF, meaning that the 10 per cent reduction in PPF compensation for pensionable service before December 1, 2006, for members below their scheme’s normal pension age is permissible.