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Threat of two-tier system as EU says DC escapes gender ruling

The Government could have to introduce separate gender equalisation legislation for occupational pension schemes after the European Commission confirmed they would not be covered by the Test-Achats ruling.

In March last year, the European Court of Justice ruled that insurers cannot price products based on gender from December 21, 2012. It means providers will have to radically change the way they price annuities, life insurance, and health insurance.

An EC document has now clarified this will not apply to occupational pension schemes.

Standard Life head of pensions policy John Lawson says: “It is crystal clear that occupational defined-contribution schemes can differentiate according to sex.

The UK Government will have to legislate to prevent this happening because otherwise you have got an arbitrage in one type of pension scheme over another.”

Hargreaves Lansdown head of pensions research Tom McPhail says: “If this were to play through as outlined, then trust-based DC schemes could continue to offer gender-based annuities whereas any nontrust based scheme would not.

“This is going to be a massive headache for the Department for Work and Pensions and the Treasury. If they do nothing, you would end up with a horrendously complicated twotier pension system.”

A Treasury spokesman declined to comment.

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