The European Union's Court of Justice (ECJ) has given its decision in the case of Parris v Trinity College Dublin. What does this European case mean for UK pension schemes? We consider the impact on age exemptions for otherwise discriminatory rules and examine whether it changes the position in respect of same-sex members’ benefits. Finally, we’ll look at what impact this decision will have when the Supreme Court hears Walker v Innospec & ors next year.
1. The ECJ decided not to follow the opinion of the advocate general
The European Union's Court of Justice (ECJ) has ruled that a provision in an Irish pension scheme that limited survivor's benefits to those marriages or civil partnerships entered into before the member reached age 60 or retirement did not constitute discrimination on grounds of sexual orientation or age.
2. No discrimination on grounds of sexual orientation
The ECJ found that there was neither direct nor indirect discrimination on grounds of sexual orientation.
3. Age discriminatory rule was permitted under age exemptions
The ECJ found that there was direct age discrimination, but that the age exemptions in Directive 2000/78/EC (the Equal Treatment Framework Directive) applied to permit the discriminatory provision in the scheme's rules.
4. The ECJ decision will be taken into account by the Supreme Court when it considers Walker v Innospec & ors next year
The UK's Supreme Court will look at similar issues when it considers Walker v Innospec & ors in March 2017. The ECJ's ruling makes it less likely that the Supreme Court will overturn the Court of Appeal's decision (which held that the pension benefits for surviving same sex couples cannot be claimed retrospectively prior to the date the relevant legislation came into force). Trustees of UK pension schemes who want more certainty should, however, wait until the Supreme Court's decision is issued before taking any action.
What was the case about?
Mr Parris was a lecturer at Trinity College Dublin. He was also a member of the university's pension scheme. Mr Parris retired from service at the end of 2010. He was, at the point of retirement, aged 64.
Under the scheme's rules, a member's spouse or civil partner is entitled to the payment of a survivor's pension if the member dies before the spouse of civil partner. The survivor's pension is, however, only payable if the member married or entered into a civil partnership before:
- reaching age 60; or
Mr Parris lived in a stable relationship for over 30 years with his same-sex partner. Mr Parris and his partner entered into a civil partnership in the UK in 2009.
Same-sex partnerships were only made possible in Ireland on and from 1 January 2011. Overseas same-sex partnerships were recognised with effect on and from 12 January 2011.
These dates were after Mr Parris reached age 60 and after Mr Parris had retired. It was therefore impossible for Mr Parris and his partner to meet the requirement in the pension scheme rules. Mr Parris's request for a survivor's pension for his partner was therefore rejected.
Mr Parris appealed this decision and, when the rejection was confirmed, began legal proceedings which culminated in the ECJ judgment. The ECJ was asked by the Irish Labour Court to give a preliminary ruling on three questions:
- Did the pension scheme's rule on survivor's benefits constitute discrimination on grounds of sexual orientation?
- Did the pension scheme's rule on survivor's benefits constitute discrimination on grounds of age?
- Did the pension scheme's rule on survivor's benefits constitute discrimination on grounds of sexual orientation in conjunction with age?
What is the legal framework?
The case centres on the Equal Treatment Framework Directive. The Directive established the EU's framework for non-discrimination and equal treatment in employment law.
In the UK, the Directive is put into effect by the Equality Act 2010.
What was the ECJ's judgment?
The ECJ said no to each of the three questions. In doing so, the ECJ rejected the opinion of the Attorney-General on this case, who had found that scheme's rule was indirectly discriminatory on grounds of sexual orientation and directly discriminatory on grounds of age.
Discrimination on grounds of sexual orientation
The ECJ found that the pension scheme's rule on survivor's benefits did not constitute discrimination on grounds of sexual orientation.
The rule applied equally to same-sex and opposite-sex relationships. There was, therefore, no direct discrimination.
The reason that the rule had such a dramatic impact on same-sex members was not because of the scheme's rules. It was because Ireland did not, at the relevant time, recognise any form of civil partnership or marriage for same-sex couples.
In finding that there was no indirect discrimination, the ECJ placed emphasis on recital 22 of the Equal Treatment Framework Directive. This expressly stated that the Equal Treatment Framework Directive was without prejudice to national laws on marital status and the benefits dependent on marital status.
The ECJ found that member states are not required by EU law:
- to provide legally recognised same-sex partnership or marriage;
- to give retrospective effect to any laws that they do enact which provide for legally recognised same-sex partnership or marriage; or
- to law down transitional measures to deal with benefits arising from marital status.
When applied to this legal framework, the ECJ concluded that the scheme's rules did not produce indirect discrimination on grounds of sexual orientation under the Equal Treatment Framework Directive.
Discrimination on grounds of age
Both the Attorney General and the ECJ found that the scheme's rule constituted direct discrimination on grounds of age.
The ECJ, however, decided that the scheme's rule did not amount to age discrimination because of exemptions that apply in respect of age discrimination and pension schemes.
The Equal Treatment Framework Directive provides a range of exemptions that permit occupational pension schemes to be legally structured in ways which would otherwise constitute age discrimination.
Unlike the Attorney General, however, the ECJ decided that the pension scheme's rule fell into one of the permitted exemptions for otherwise age discriminatory provisions (i.e. setting criteria which limits admission to or entitlement to old age benefits under the scheme by reference to employees' ages).
Because the exemption applied, there was no direct or indirect age discrimination in this case.
Discrimination on combined grounds of sexual orientation and age
The ECJ found that there was no new category of discrimination.
In cases such as this (where there has been no discrimination on any of the standard protected characteristics), the ECJ was unwilling to conclude that a combination of more than one of the possible strands of discrimination (e.g. sexual orientation and age) could produce grounds for a successful claim.
What does this mean for UK pension schemes?
One of the reasons that this European case has been closely followed in the UK is its similarity with the case of Walker v Innospec & ors (2015).
In its 2015 ruling on Walker v Innospec & ors, the Court of Appeal decided that legislation which is intended to protect employees under anti-discrimination legislation cannot be relied upon to extend such protection to a period of time before the date the legislation was introduced.
The case will be heard on appeal before the UK's Supreme Court in March 2017.
The ECJ's decision in Parris v Trinity College Dublin makes it more likely that the Court of Appeal's decision and therefore the status quo will be preserved.
Attention in the media
The Parris v Trinity College Dublin case received a lot of attention in the media. In fact, pensions made front page news with alarming regularity in 2016. High profile insolvencies brought an intense level of political, media and public scrutiny on commercial transactions, trustee decisions and the regulatory framework.
Following the BHS and British Steel cases in particular, trustees, employers and their advisers have been left with far more questions than answers:
- Will BHS, British Steel and Halcrow change approaches to corporate transactions and liability management?
- How will the regulatory landscape change in the coming year, and what impact will this have on your scheme?
- How can employers and trustees work together more effectively to deliver sustainable solutions?
- Does the pensions industry have the tools and expertise to help businesses manage their pension liabilities?
- What steps can you take to avoid your scheme becoming front page news in 2017?