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EU gender directive does not apply to occupational pensions

The European Commission’s decision to ban gender discrimination when pricing annuities does not apply to occupational pension schemes.

In March last year, the European Court of Justice ruled that insurers cannot price products based on gender from December 21, 2012.

The move will mean that providers will have to radically change the way they price annuities, life insurance, and health insurance.

A European Commission document, published on December 22, has now clarified that this ban will not apply to occupational pension schemes. It says: “Some insurance products, such as annuities, contribute to retirement income. The Directive however only covers insurance and pensions which are private, voluntary and separate from the employment relationship, employment and occupation being explicitly excluded from its scope.

“Equal treatment of women and men in relation to occupational pensions is covered by Directive 2006/54/EC of the European Parliament and of the Council of 5 July 2006 on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation (recast).”

Standard Life head of pensions policy John Lawson says: “The Test-Achats case only challenged the goods and services directive, which includes personal pensions.

“An occupational pension scheme is about an employment relationship, and this has not been challenged.

“It is absolutely crystal clear that occupational defined-contribution schemes can differentiate according to sex.”

Hargreaves Lansdown head of pensions research Tom McPhail says: “If you are running an occupational scheme then you can continue to use gender based underwriting.

“If this were to play through as outlined, then trust based DC schemes could continue to offer gender based annuities whereas any non-trust based scheme would not.

“This is going to be a massive headache for DWP and Treasury.”


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There are 8 comments at the moment, we would love to hear your opinion too.

  1. What about PP’s that have employer contributions as part of the terms of emplyment??

  2. More simplification!

  3. Doesn’t this suggest that GPP/Stakeholder/NEST members will receive less attractive annuity rates than occupational scheme members?

  4. Huw, whether they get a better rate or a worse rate will depend on their gender. Bonkers eh?

  5. The EC’s statement of the 22nd December is ambiguous.

    Does “only covers insurance and pensions which are private, voluntary and separate from the employment relationship” mean that all three criteria must be fulfilled for the the gender ruling to apply? That is the proper reading of the English. If correct, then I disagree with Tom McPhail over non-trust based schemes.

    Like many, our GPP is “private” by definition, “voluntary” in the sense that an employee can opt-out, but is not “separate from the employer relationship” since the employer is obliged to contribute if the employee does not opt out and one cannot be contibute if not an employee..

  6. So my male employees get a lower pension from their SIPPs, part funded by our firm, than they would if we have a group pension scheme?

    Who are these idiots in Europe?

  7. @Norm d’Plume

    “Who are these idiots in Europe?”

    Are they European idiots?

  8. We ‘ll talk about the EU Gender Directive during the conference we organize on the 31st of may 2012 in Paris. Join us!

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