The pension bill handed to employers as a result of a recent European legal case has been vastly exaggerated, experts have claimed.
The European Court of Justice has advised the UK that part-timers who were barred in the past from joining an occupational pension scheme can now claim membership as far back as 1976.
But there are already disputes over how far-reaching the decision will be. Estimates of the total cost to UK employers range from £100m to £17bn. One block on claims is that in order to gain past membership many part-timers will have to backdate their own contributions.
David Marshland, employment law specialist at William M Mercer, said limits on claims meant the likely cost would be around £100m and could be reduced further.
“Amongst Britain’s six million part-timers, only one in ten is likely to have five years’ service due to the high turnover in this group. Probably only a quarter stay with the same employer for more than two years – the minimum period usually needed to qualify for preserved benefits under UK occupational pension schemes,” he said.
But unions are likely to encourage part-timers to take cases. Some union officials have suggested loaning money to members to pay their past contributions and gain retrospective membership.
Unifi spokesman Dai Davies said one of the union’s members affected by the decision was a former part-timer at HSBC (previously Midland Bank) who had 31 years of service. Prior to the judgment her occupational pension entitlement was £13.36 a month – if the UK accepts backdating to 1976 it will rise to several hundred pounds a month. He said there were likely to be many claims in the finance sector as most pension schemes do not require employee contributions.
