Experts question legal basis of decision to scrap ‘rule of 85′

The government’s main argument for scrapping the right of local government workers to claim full pension benefits at 60 has been called into question by legal experts.

The Local Government Pension Scheme’s so-called ‘rule of 85′ allows members whose age plus years of service add up to 85 to retire with full rights at 60, rather than wait until they are 65.

Last week, council workers voted for the UK’s biggest industrial action since the General Strike of 1926, in protest at plans to scrap the rule for new members and those aged 60 after 31 March 2013. Up to 1.5 million staff – from cooks to refuse collectors – will stage a walkout on 28 March following the national ballot of eight unions.

The government insists the rule breaches forthcoming age discrimination legislation because people with the same length of service could be treated differently depending on their age.

But James Davies, partner at law firm Lewis Silkin, said it was unclear whether the rule of 85 would actually breach the laws, due to come into effect from 1 October.

“The rule of 85 is not that different to other exemptions on pension schemes set out in the draft regulations,” he said. “It is open to question whether the rule would be unlawful.”

Michael Calvert, head of pensions at law firm Reed Smith, said scrapping the rule was “a red herring”.

“There are obvious public policy reasons for ending this practice,” he said. “The government could let the practice continue, but it wants to end this costly benefit.”

A European Commission spokeswoman on employment, social affairs and equal opportunities, recently said the directive had no influence on pension value or age.

The unions said using the age directive for ending the rule of 85 was just “a cover” for its “attack on local government pensions”.

However, the Employers Forum on Age said that as schemes such as the rule of 85 were not specifically exempted, they could be viewed as discriminatory.

With less than a week until the pensions strike, local government HR directors have been preparing contingency plans. These include agreeing exemptions with unions on certain critical services.

For our Pensions Watch, go to http://www.personneltoday.co.uk/Articles/2006/02/28/33735/Pensions+Watch+changes+to+occupational+pension+schemes.htm


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