Many employers offer benefits to their staff members including life insurance, health insurance, and/or medical insurance. Whilst age related discrimination is generally prohibited, it is accepted that these benefits may cease once the employee attains 65 years of age or the state retirement age. However as the state retirement age increases, employers need to consider if they may be caught out by age discrimination.
The age discrimination exemption was put in place for policy purposes; namely that the government considered that employers were likely to cease offering insured benefits to staff members if they were required to pay increased premiums to cover older members of their workforce.
Paragraph 14 of Schedule 9 to the Equality Act provides that it is not unlawful discrimination to terminate these benefits where the employee reaches:
(a) the age of 65, or
(b) the state pensionable age.
(Whichever is the greater).
The key wording here is “whichever is the greater” and what this means as the state retirement age rises.
Sub-paragraph 4 of this provision refers to the state pensionable age being determined in accordance with paragraph 1 of Schedule 4 to the Pensions Act 1995. This section sets out tables showing when the pension is payable to employees based on their dates of birth. Pension ages range from 60 (for women born before 6 April 1950) to 68 (for people born after 5 April 1978). Reading the wording of the section, employers can cease employees’ benefits once they either attain 65 years of age or when their state pensionable age applies (whichever is greater).
Employers need to be aware that the pension age will be 66 for both men and women from October 2020 and in most cases, insured benefits should cover that time period.
The state pension age will continue to rise over time and will mean a shifting age limit for insured benefits. Employers will need to plan and budget for this over the coming years, otherwise they could be at risk of an age discrimination claim.
(co-written by Aleksandra Golat, Solicitor and Claire Merrit, Partner)