In a welcome announcement today in response to concerns voiced by industry and employers, Minister for Pensions Reform James Purnell said pension provisions, forming part of the Government's new age-discrimination legislation, will not now come into force until 1st December 2006. An SI has been laid today (SI 2006/2408) to amend the Employment Equality (Age) Regulations 2006 (SI 2006/1031) to this effect.

Although the press release headlines this as an "additional two-months for pension schemes to adjust to age-discrimination rules", the DWP will be conducting a short informal consultation early next month on revised regs. As Ministers cannot admit to errors, Mr Purnell described the purpose of the consultation with - one hopes - typical English understatement as "to assess whether any amendments are required to provide greater clarity for schemes and employers." In reality, the DWP has been bombarded with emails and phone calls as a result of the narrowing of the original broad exemption for pension schemes.

The Employment Equality (Age) Regulations, most of which will still come into force on 1 October 2006, implement the age strand of the European Employment Directive 2000/78/EC. The Regulations outlaw unjustified age discrimination in employment and vocational training, including pay and pensions. Although the DWP is leading on the pensions aspects, the overall lead on these Regs lies with DTI which has produced a set of eight factsheets, one being on occupational pensions. This opens with the now notorious sentence "The new age discrimination laws aim to disrupt occupational pension arrangements as little as possible, and to avoid the risk of pension provisions being reduced." Note it says nothing about the risk of pension provisions having to be enhanced.

Article 6.1 of the Directive allows Member States to include exemptions in national legislation for age discriminatory practices which are objectively and reasonably justified. Article 6.2 of the Directive also allows exemptions in relation to some aspects of occupational pension schemes. Schedule 2 of the Regulations sets out those age related aspects of the operation of occupational pension schemes that will continue to be allowable without having to be objectively justified by the schemes themselves. If a scheme wishes to continue with an age related practice not covered by Schedule 2, it will still be able to do so as long as the scheme itself can objectively justify the activity.

Naturally, however, schemes want a greater degree of certainty about what counts as "objectively justifiable" without having to go to court to find out every time a new situation arises. They will also be seeking to minimise the period of the inevitable equivalent of a "Barber window" (ie the period between 1 December 2006 and the date the scheme trust deed and rules are amended) - the reverberations of that earlier catastrophic European pensions judgement are still being felt - and the inherent risks.

In addressing these concerns, the DWP is going to be looking at:

• Reg 32 - length of service for trustees;
• Early Retirement Pivot Age (= age specified in the scheme rules as the earliest age at which age related benefit becomes payable without actuarial reduction (disregarding any special provision as to early payment on grounds of ill health or otherwise))/ Late Retirement Pivot Age (= age specified in the scheme rules above which benefit becomes payable with actuarial enhancement) - new definitions;
• Early/enhanced/flexible/late retirement;
• Bridging pensions;
• Ill health, child and death benefits, including lump sums;
• LEL issues;
• Actuarial calculations/enhancements/reductions etc;
• Definitions of sections;
• HMRC rules;
• GPPs and PPs; and
• DTI Guidance - amending existing text to reflect amendments.