The Equality Tribunal
Pension Acts 1990-2008
Decision
DEC-P2011- 004
Parties
Kevin Charlton
(represented by SIPTU)
V
Bus Éireann
File Reference: ES/2008//631
Date of Issue: November 2011
Pension Acts 1990-2008
Decision
DEC-P2011- 004
Kevin Charlton
(represented by SIPTU)
V
Bus Éireann
Keywords
Pension Acts 1990 2008, Rules of Occupational Pension Scheme, Section 65(1)(a-f) - occupational benefits, Section 66(1) - discrimination and less favourable treatment, Section 66(2)(f) - age , Section 70 - principle of equal pension treatment, Section 76(1) - Burden of Proof, Section 72 -defence to fix age as a condition for admission to the scheme, Section 72(e) - objective justification, Article 6 of Council Directive 2000/78/EC establishing a general framework for equal treatment in employment and occupation.
Delegation under the Pension Acts, 1990-2008
The complainant referred a complaint to the Director of the Equality Tribunal under the Pension Acts, 1990 to 2008 on the 23rd September 2008. On the 26th April 2011, in accordance with his powers under section 81J of the Pension Acts as amended by the Social Welfare (Miscellaneous Provisions) Act 2004 which apply the relevant provisions of the Employment Equality Acts to occupational pension schemes, the Director delegated the case to me, Marian Duffy, an Equality Officer, for investigation, hearing and decision and for the exercise of other relevant functions of the Director under the Acts on which date my investigation commenced. Submissions were received from both parties. As required by the Acts and as part of my investigation, I proceeded to hearing on the on the 9th June 2011. The last submission was received on the 28th October 2011.
1. Dispute
1.1 The dispute concerns a claim by the complainant that he was discriminated against by the above named respondent on the age ground in terms of Section 66 (1) and 66(2)(f) and in contravention of Section 70 of the Pensions Acts 1990 - 2008 in relation to access to an occupational pension scheme.
2. Summary of the Complainant's
2.1 The complainant submitted that the respondent discriminated against him on the age ground in that he was not allowed to join the company pension scheme because he was over the age of 50 when he commenced work with the company. The complainant commenced employment with the respondent on the 8th of May 2001 and he was 4 months over the age of 50. He applied to join the occupational pension scheme. He was informed that under the rules of the CIE Pension Scheme for Regular Wages Staff he could not join the scheme because as he was over 50 years old. In response to the respondent's contention that he could have entered into a Personal Retirement Savings Account (PRSA) which the company contributes to, the complainant said that it was never offered to him.
2.2 The complainant's representative submitted that the age restriction for admission to the pension scheme was discriminatory on the age ground and the respondent had to objectively justify the discrimination. She submitted that the complainant had a number of years left before he reached retirement age and because of the failure to admit him to the pension scheme he will have to rely on the contributory old age pension.
3. Summary of the Respondent's Case.
3.1 The respondent denies discriminatory treatment on the age ground. The Personnel Manager (PM) submitted that the pension scheme which is the CIE Pension Scheme for Regular Wages Staff is a statutory scheme and was established in accordance with Section 44 of the Transport Act, 1944. Subsection 1 of that Section states: "The Company may prepare and submit to the Minister and shall, if so required by the Minister, submit to the Minister within such time as he may direct, a scheme (in this section referred to as a superannuation scheme) for establishing on a contributory basis a superannuation fund for the benefit of the employees or any particular class of the employees of the Company."
The Pension Scheme was established in accordance with S.I. No. 242/1945 - Córas Iompair Éireann Superannuation Scheme for Regular Wages Staff (Confirmation) Order, 1945. The S.I. provides that an applicant for admission to the scheme must be at least 20 years of age and not more than 50 years on appointment to the regular staff. The respondent submitted that the company has no discretion with regard to these requirements. The scheme is not service related and the same pension, which amounts to about 20% of the final weekly wage, is paid to on retirement irrespective of the length of service.
3.2 The complainant's date of birth is the 20th of January 1951 and he joined the company on the 8th of May 2001 and was appointed to the regular staff on the 8th May 2002. He was over 50 and ineligible to join the pension scheme. In such circumstances the PM submitted that the complainant could have joined the PRSA which is operated on behalf of the company and to which the company contributes. PM said that he was surprised that the complainant had not been offered a PRSA as it was introduced in the company in 2002 following the introduction of the Pension Amendment Act 2002 and there is no age restriction in joining a PRSA. Personnel contacted all the employees over 50 who did not qualify for a company pension and offered them a PRSA.
3.3 The respondent submitted that the scheme is a funded defined benefit scheme with contributions paid by members and the company. Given that the rules of the scheme are contained in the various Statutory Instruments, any changes to the rules must be agreed by the company (CIE) and the Trade Unions representing the staff concerned an approved by the Minister for Transport, Tourism and Sport. It was further submitted that an increase in the age limit for entry to the scheme would not be supported by the company, particularly as the pension payable is not based on service and would have serious funding implications and it would not be sustainable. It would not be reasonable that a person could join the scheme at the age of 64 and receive the same benefits as someone who had been contributing member for 45 years. The respondent submitted that in this regard the company is satisfied that in the circumstances an upper age limit is both appropriate and necessary.
4. Conclusions of the Equality Officer
4.1 The matter I have to consider is whether the complainant was discriminated against on the age ground in relation to access to the pension scheme. The Pensions Act, 1990 as amended by the Social Welfare (Miscellaneous Provisions) Act, 2004 provides at Section 66 --
"For the purposes of this Part, discrimination shall be taken to occur where --
(a) a person is treated less favourably than another person is, has been or would be treated in a comparable situation on any of the grounds mentioned in subsection (2) (in this Part referred to as the 'discriminatory grounds') ........
(2) As between any 2 persons, the discriminatory grounds (and the descriptions of those grounds for the purposes of this Part) are -- ....................
(f) that, subject to subsection (3), they are of different ages (in this Part referred to as 'age ground'),
Section 70 states: "(1) Subject to this Part, the principle of equal pension treatment is that there shall be no discrimination on any of the discriminatory grounds (including, subject to section 68(2), indirect discrimination) in respect of any rule of a scheme."
The burden of proof under section 76 -- (1) provides:
"Where in any proceedings facts are established by or on behalf of a complainant from which it may be reasonably inferred that there has been a breach of the principle of equal pension treatment in relation to him, it is for the respondent to prove the contrary."
4.2 It is common case that the complainant was not allowed to join the pension scheme because he was over the age of 50 when he was recruited by the respondent and the rules of the scheme provide that an applicant to the pension scheme has to be at least 20 years old and under the age of 50 on application. The complainant submits that this rule contained in the respondent's pension scheme is discriminatory on the age ground and the respondent has not given an objective reason for having such an age restriction in the pension scheme. It was submitted on his behalf that any discrimination as regards age must serve a legitimate aim or purpose and it is for the employer to prove that placing a cap on the entry age to the pension scheme is objectively and reasonably justified. The funding and financial implications cited by the respondent are not objective reasons for denying access to a pension as it has been held in cases that discrimination cannot be justified solely on the grounds of increased costs. In considering this point the complainant's representative said that the respondent has provided no reason for the discriminatory treatment and referred me to the reasoning in the Equality Officer in the case of Five Named Complainants and Hospira Ltd., DEC-E/2010/083.
4.3 The respondent submitted that Section 72 of the Acts permits the employer to set an age limit for entry to the scheme. In addressing the matter of objective justification, the respondent submitted that the rules and the eligibility requirements as regards the age of entry to the scheme are contained in SI No. 242 of 1945 and any changes to the pension scheme would have to be agreed by CIE the Trade Unions and the Minister for Transport, Tourism and Sport. Any increase to the upper age limit for entry to the scheme would have serious funding implications given that the same pension is paid to retiring staff irrespective of service and the contribution made to the scheme. The respondent submitted that it was satisfied that in the circumstances an upper age limit for entry to the scheme is both appropriate and necessary and is in accordance with the exemptions set out in section 72 of the Acts.
4.4 I am satisfied that in accordance with section 76 of the Act that the complainant has established that he was treated less favourably than a person who was recruited between the ages of 20 and 49 was treated in similar circumstances in that he was not admitted to the pension scheme because of his age. I find therefore that the complainant has established a prima facie case of discriminatory treatment on the age ground. Accordingly the burden of proof has shifted to the respondent.
4.5 Section 72 provides: "(1) It shall not constitute a breach of the principle of equal pension treatment on the age ground for a scheme to --
(a) fix age or qualifying service, or a combination of both, as a condition or criterion for admission to the scheme,
(b) fix different ages or qualifying service, or a combination of both, as conditions or criteria for admission to the scheme for employees or groups or categories of employees,
(c) fix age or qualifying service, or a combination of both, as a condition or criterion for entitlement to benefits under the scheme,
(d) fix different ages or qualifying service, or a combination of both, as conditions or criteria for entitlement to benefits under the scheme for employees or groups or categories of employees,
(e) (i) fix age or qualifying service, or a combination of both, as a condition or criterion in relation to the accrual of rights under a defined benefit scheme or in relation to the level of contributions to a defined contribution scheme, or
(ii) fix different ages or qualifying service, or a combination of both, as conditions or criteria in relation to the accrual of rights under a defined benefit scheme or in relation to the level of contributions to a defined contribution scheme for employees or groups or categories of employees,
where, in the context of the relevant employment, to do so is appropriate and necessary by reference to a legitimate objective of the employer, including legitimate employment policy, labour market and vocational training objectives,
(f) use criteria as to age in actuarial calculations:"
4.6 It is my view that subsection (a) and (b) cited above is a full defence for the respondent in that an employer is allowed to fix age as a condition of entry to the company pension scheme. The next matter is whether the respondent is required to objectively justify this rule in the pension scheme in accordance with the paragraph which follows subsection (e) cited above. It is my view that this paragraph which follows subsection (e) only applies to this subsection and that the respondent is only required to objectively justify a discriminatory rule in the pension scheme if the rule relates to the accrual of rights. In applying the canons of statutory interpretation it is clear to me that the said paragraph which follows subsection (e) does not apply to subsections (a) to (d) or to subsection (f) of Section 72 (1), provided it does not result in gender discrimination. In considering this matter I have referred to Article 6 of the Council Directive Directive 2000/78/EC establishing a general framework for equal treatment in employment and occupation. The Pension Act 1990 was amended by the provisions of the Social Welfare (Miscellaneous Provisions) Act 2004 which is the relevant legislation transposing the terms of the Council Directive into Irish legislation. Article 6 of the Directive provides:
"1. Notwithstanding Article 2(2), Member States may provide that differences of treatment on grounds of age shall not constitute discrimination, if, within the context of national law, they are objectively and reasonably justified by a legitimate aim, including legitimate employment policy, labour market and vocational training objectives, and if the means of achieving that aim are appropriate and necessary.
Such differences of treatment may include, among others:
(a) the setting of special conditions on access to employment and vocational training, employment and occupation, including dismissal and remuneration conditions, for young people, older workers and persons with caring responsibilities in order to promote their vocational integration or ensure their protection;
(b) the fixing of minimum conditions of age, professional experience or seniority in service for access to employment or to certain advantages linked to employment;
(c) the fixing of a maximum age for recruitment which is based on the training requirements of the post in question or the need for a reasonable period of employment before retirement.
2. Notwithstanding Article 2(2), Member States may provide that the fixing for occupational social security schemes of ages for admission or entitlement to retirement or invalidity benefits, including the fixing under those schemes of different ages for employees or groups or categories of employees, and the use, in the context of such schemes, of age criteria in actuarial calculations, does not constitute discrimination on the grounds of age, provided this does not result in discrimination on the grounds of sex.".
The test set out above at the beginning of Article 6 which allows discrimination in certain circumstances provided it can be objectively justified applies to Article 6 (1)(a) (b) and (c) above. I note that Article 6 (2) above which only applies to pension schemes has no such saver. It is a separate subsection of the Article to subsection 1 and there is no indication from the wording that there is any link to the objective justification test in Article 6(1). Subsection 2 of Article 6 of the Council Directive states that it is not discriminatory to fix age as a criterion for admission to an occupational pension scheme. It is clear from the subsection that a Member State has complete discretion in fixing the ages of admission to a pension scheme and it does not constitute discrimination on the age ground provided it is not discriminatory on the gender ground. As both Article 6(2) of the Directive and section 72(1) of the Pension Acts are clear and unambiguous, I am satisfied the rules of the respondent's pension scheme which sets out an age limit for admission to the scheme is not discriminatory on the age ground. I find therefore that Section 72 (1)(a) and (b) of the Pensions Acts is a full defence for the respondent in relation to the prima facie case raised by the complainant.
5 DECISION
5.1 Having investigated the above complaint, I hereby make the following decision in accordance with section 81E of the Pensions Acts:
The respondent did not discriminate against the complainant on the age ground pursuant to Section 66(1)(a) and 66(2)(f) and in terms of Section 70 of the Acts in relation to the rules of the Occupational Pension Scheme.
I recommend that the respondent give the complainant an opportunity to join the PRSA scheme from the date the scheme was introduced in the company.
_____________________
Marian Duffy
Equality Officer
16th November 2011