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OCCUPATIONAL PENSION SCHEMES: TOWARDS PERFECT EQUALITY?
The Advocate General of the European Court of Justice (ECJ) has given his opinion on several cases affecting equal treatment between men and women in occupational pension schemes. If, as is likely, the Court follows his advice, formal equality of pension provisions will be strengthened in respect of retirement age, uniformity of actuarial tables, and benefit entitlement for surviving spouses.
The questions before the Court hinge on the interpretation of a celebrated ECJ judgement of 17 May 1990 in the case of Douglas Harvey Barber v Guardian Royal Exchange Assurance Group. This judgement ruled between several alternative readings of Article 119 of the Treaty of Rome and on the interpretation of a number of Community directives.
BACKGROUND TO THE BARBER JUDGEMENT
Article 119 of the Treaty of Rome imposes on all EC member States the principle of equal pay for equal work as between men and women workers. It defines "pay" as "the ordinary basic or minimum wage or salary, and any other consideration, whether in cash or in kind, which the worker receives directly or indirectly, in respect of his employment from his employers". However, the applicability of this principle to occupational pensions outside the basic state pension scheme has remained unclear. Prior to the Barber judgement, a plethora of ECJ rulings had drawn an ill-defined dividing line between social security and pay, effectively excluding the former from the scope of Article 119. Supplementary pension schemes, ill-adapted to this classification, were sometimes included under one heading, sometimes under the other. This ambiguity has particularly affected British "contracted-out" schemes, whose members contractually opt out of the earnings-related component of the state pension scheme in favour of a system of contributions and benefits substituted for those of the state scheme.
In addition, the Court of Justice drew a subtle distinction between the terms "pay" and "other conditions of work". This meant that occupational pension schemes were treated differently according to whether the question at issue concerned contributions, benefits, or conditions of eligibility for scheme membership or benefit entitlement.
A number of EC directives on equality of treatment have exacerbated this confusion by allowing occupational pension schemes to depart from the principle of non-discrimination in respect of the age at which...