Age discrimination

Published:

RECENTLY introduced rules on age discrimination risk discouraging companies seeking to employ older workers, a leading pensions lawyer has warned.

Under The Employment Equality (Age) Regulations 2006, employees will be entitled to retain benefits such as life assurance if they continue working beyond the normal retirement age of 65.

Yet employers hoping to avoid the prohibitive costs of providing life assurance for over-65s by retiring everyone at that age as a matter of policy risk falling foul of another new legal duty to consider all requests for extended working.

Gary Cullen, head of the national pensions unit at UK-wide law firm Maclay Murray & Spens, said: “There is a real sense that these regulations have, ironically, made it less attractive for businesses to employ older workers. Even in situations where it would be mutually beneficial to allow work beyond 65, the requirement to continue life assurance makes this impractical. This obviously doesn’t justify excluding individuals on the basis of age, but it does leave employers in an impossible position.

“Where the cost of providing ongoing benefits such as life assurance is met by a final salary pension scheme, the employer may regard this as a solution. This extra liability will no doubt concern trustees, although, ultimately, the employer is still liable to fund the benefits on the balance of cost basis.

“If, on the other hand, the employer operates a money-purchase scheme – which does not have a general pot of money from which to pay for benefits – it will pick up the full cost of the life assurance when an employee dies.”