Direct Age Discrimination: Firefighters’ Pension Schemes

Compensation
posted by KeithDaniel

In the case of Secretary of State for the Home Department and others v Sargeant and others, the Court of Appeal (“CA”) held that transitional provisions in firefighters’ pension schemes were directly age discriminatory.

The Firefighters’ Pension Scheme 1992 was closed to new members on 1 April 2006. Existing members continued to gain benefits under the 1992 scheme but new members joined the Firefighters Pension Scheme 2006. The Firefighters’ Pension Scheme 2015 (FPS 2015) was introduced on 1 April 2015.

The key differences between the 1992 scheme and the FPS 2015 are as follows:

  • The 1992 scheme has a normal pension age of 55, whereas the normal pension age for the FPS 2015 is 60;
  • The FPS 2015 has lower accrual rates than under the 1992 scheme; and
  • Under the FPS 2015, pension is based on a career average salary rather than a final salary as under the 1992 scheme.

The government introduced transitional provisions so that members who were within ten years of normal pension age on 1 April 2012 were permitted to remain members of the 1992 scheme. Firefighters who were between ten and fourteen years from normal pension age on 1 April 2012 were given tapered protection. Those who were more than fourteen years from normal pension age on 1 April 2015 had no protection and went straight onto the FPS 2015.

The government provided the ten-year protection period as they believed that those closest to retirement had less time to make adjustments to their financial planning. In addition, similar provisions had been agreed with other trade unions for other workforces and the government wanted to maintain consistency across the public sector.

A number of firefighters issued claims in the Employment Tribunal (“ET”) arguing that the transitional provisions were age discriminatory as younger firefighters were disadvantaged as they were transferred onto the FPS 2015 straight away. A few firefighters also brought equal pay, sex discrimination and/or race discrimination claims due to the fact that there were fewer women and ethnic minority firefighters in the older protected cohort.

The ET dismissed all of the claims. Direct age discrimination can be objectively justified by a legitimate aim and the ET felt that the government should be given a “wide margin of appreciation” as to the aims and measures it adopts. The ET also held that any sex or race differences between the two cohorts were due to age and not related to sex or race.

The firefighters appealed to the EAT. The EAT upheld their appeal (save for the equal pay claim) holding that the transitional provisions constituted unlawful age discrimination.

The government subsequently appealed to the CA. The CA however dismissed the appeal, holding that the government had failed to show that it was pursuing any legitimate aim.

The CA held that if the government wanted to objectively justify the transitional provisions on the basis of social policy aims, then they would have to produce supporting evidence. It was for the government to show that, despite the apparently discriminatory effect of the transitional measures as between those groups, their measurers were a legitimate aim of social policy. They sought to do so by nothing more than assertions and generalisations. The court concluded that was not good enough.

In this case, the government asserted an aim of protecting those closest to retirement from the financial effects of pension reform, since they would have the least time to rearrange their affairs before retirement. However, there was no evidence to support this and, in fact, this group was least affected by the changes (because benefits already accrued under the old schemes for past service were protected for all). This meant the EAT was entitled to find that the provisions were irrational.

The decision is significant and there could be a wider impact in relation to other public sector pension schemes with similar transitional provisions.

The government are seeking permission to appeal to the Supreme Court and we will report further when we know the outcome.

If you would like more information about the issues raised in this article or any other aspect of employment law, please contact us at 02920 345511 or employment@berrysmith.com.