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Anti-ageism laws may force firms to raise pension contributions

Employers may have to boost pension contributions for employees of all ages to avoid breaking anti-age discrimination laws, says Scottish Life head of pensions strategy Steve Bee.

The Employment Equality (Age) Regulations 2006, which come into force in October, have raised concerns that employers will reduce pension benefits for older employees.
But Bee says it may be too late for employers to “level down” schemes as this may be deemed to be discriminatory against older employers from October 1. He says employers may instead be forced to raise their schemes, bringing younger workers in line with older workers.

Bee says: “There is a sound reason for acting ahead of time in such things as any judgements made in the future would almost certainly require schemes to offer parity to workers who lose out through discriminatory practices by putting them on the same terms as more disadvantaged employees.

“Levelling down the benefits of the advantaged employees probably would not be an option at that stage. My guess is that levelling up is going to be the next thing for trustees to worry about.”

HSBC head of pensions & retirement income Ian Martin says: “One would hope that employers would take a positive view towards levelling up.”

Standard Life revealed this week that it is scrapping the requirement for its 8,000 UK staff to retire at 65 to comply with the anti-ageism rules.

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