Pension rights cost disputed

Claims that the European ruling on the part-timers’ pensions test case will
cost British employers many billions of pounds are "simple
scaremongering", according to benefits consultancy William M Mercer.

Figures of between £10bn and £17bn have been quoted in the wake of the
European Court’s decision in Preston and Fletcher v Wolverhampton Borough
Council and Midland Bank. It said limiting the backdating of part-timers’
entitlement to pension rights to two years was unlawful, opening the way for
claims to be dated all the way back to 1976.

But the cost to industry is likely to be closer to £100m, said David
Marshland, William M Mercer’s employment law specialist. This is because the
ECJ has upheld the six-month limit for bringing claims after leaving
employment. Also, the House of Lords might yet apply the general limitation
period in British contract law of six years.

Further factors are likely to hinder the ability of part-timers to bring
claims, Marshland said.

"Probably only a quarter [of Britain’s six million part-timers] stay
with the same employer for more than two years – the minimum period usually
needed to qualify for preserved benefits," Marshland said.

An added complication is that claimants must find an equivalent full-timer
of the opposite sex, and many part-timers work in jobs where there are no
equivalent full-timers. Claimants must also be prepared to pay their share of
back-dated pension contributions.

Other advisers have, however, put the potential cost much higher, partly
because the cases have trade union backing which may help claimants meet the
cost of their own contributions.

"Also, nearly a quarter of all UK pension schemes are non-contributory,
so backdated membership would be free."

Comments are closed.