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.
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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.
