Age laws could lead to loss of staff benefits

Changes to the age discrimination laws relating to pensions could cause a widespread levelling down of schemes and see many long-serving employees lose out on future benefits, an employment law expert has warned.

The Department for Work and Pensions has been consulting on what constitutes a ‘section’ of a pension scheme, which can be treated as a separate scheme and allow employers to provide variable benefits to workers.

Schemes can only continue to offer different levels of benefits to different groups of employees if this is under a separate ‘section’ of the pension scheme, and as long as it does not admit new members or allow existing ones to accrue benefits.

Jane Wolstenholme, partner at law firm Wedlake Bell, warned that long-serving employees could suffer as a result of the changes.

“If sections have to be closed to accrual to justify different treatments, it is highly likely that many employers will only leave open for accrual sections that provide the cheapest benefits. This will have an extremely negative impact on employees who have worked at a company for a long time,” she said.

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