Mr Williams worked as a technician at Swansea University and was a member of his employer’s pension scheme. He suffered from a number of complaints which rendered him disabled. From July 2011, he halved his hours of work in order to better cope with his disability. Despite this reduction in his hours, he gradually became incapable of carrying out his job and he took ill health retirement in June 2013.

Under the terms of the pension scheme, Mr Williams received both a pension and an enhanced pension calculated on the basis of his final pay. However, Mr Williams claimed that the terms of the pension scheme were discriminatory. He argued that had he been employed on a full-time basis at the time of his retirement, his enhanced pension would have been double that he received. He noted that his disability had caused him to work reduced hours, therefore he argued he had been unfavourably treated because of something which had arisen in consequence of his disability. The Employment Tribunal agreed that he had been discriminated against on those grounds.

The pension scheme trustees appealed against the Tribunal’s decision. The EAT considered the meaning of the word “unfavourably” in the equality legislation and disagreed with the Tribunal that “unfavourably” could be equated with the concept of being subjected to a “detriment”.

“The determination of that which is unfavourable involves an assessment in which a broad view is to be taken and which is to be judged by broad experience of life. Persons may be said to have been treated unfavourably if they are not in as good a position as others generally would be.” Employment Appeal Tribunal

The EAT felt Tribunal might have applied a “less favourable treatment” test and concluded that Mr Williams was treated less favourably than another disabled person whose disability might not have required him to work reduced hours by the time of his ill health retirement. However, this was the wrong test to apply and it did not mean that Mr Williams had been treated unfavourably.

“Since the Tribunal applied the wrong test, adopted the wrong approach, failed to recognise that anyone who could legitimately claim ill-health retirement under the scheme had to be disabled, and reasoned from inappropriate analogies, its decision that the Claimant was unfavourably treated because of something arising in [...]]]> http://lawandlabour.com/pension-scheme-not-discriminatory/feed/ 0 http://lawandlabour.com/tories-proposals/ http://lawandlabour.com/tories-proposals/#comments Fri, 15 May 2015 16:01:10 +0000 http://lawandlabour.com/?p=2063 In the run-up to the general election, the Conservative Party proposed a number of changes to employment law if they returned to power. In the table below we round up some of their key proposals.

  Tax Increase the tax-free personal allowance to £12,500. Equal pay Introduce private sector equal pay reporting by requiring companies with more than 250 employees to publish the difference between the average pay of their male and female employees. Public sector termination payments Introduce new legislation to cap enhanced redundancy payments in the public sector at £95,000. Require repayment of public sector exit payments in certain circumstances. Long-term absence Reduce benefits of those suffering from long-term, treatable conditions if they refuse to follow treatment recommended for them. Volunteering Allow employees working in large companies (employers with more than 250 employees) or the public sector to receive three days’ paid volunteering leave. Pensions Introduce a single-tier pension system.

Photograph: “Houses of Parliament” /© Davoud D.

Pension liberation fraud is the use of “pensions loans” or cash incentives along with misleading information to entice savers to transfer money from one pension scheme to another.  Fraudsters are aware that money is tight, so it’s not surprising pensions savers fall victim to the promise to “unlock the value of a pension” in return for a cash advance.

TPR has advised members of pension schemes to be alert to the following warning signs that may indicate a fraudulent pension scheme:

According to The FT, once a pension saver has been contacted, they are often “persuaded to put their funds in high-risk investments and left exposed to tax penalties”.

Pension liberation schemes often give misleading information about the tax consequences of the options they offer. A pension saver is usually only allowed to access pension funds before the age of 55 in rare circumstances. If the saver gains access to their pension funds other than by receiving a pension at retirement, this may be considered an “unauthorised payment” for tax purposes and will be taxed at a minimum rate of 40%.  The member might also incur further charges and penalties that could reduce the value of their pension savings by more than 50%.

TPR advises savers to take the following preventative measures if they think they are being targeted by a pensions liberation scheme.

Visit the Pensions Advisory Service for further advice.

JP Morgan has been ordered by UK tax authorities to pay approximately £500m in underpaid taxes which it had avoided paying by using an offshore trust for employee bonuses.  Thousands of current and former employees will be required to dip into their pockets to help the company pay back the vast amount owed.

The first an employee knows about an underpayment will be when he receives a tax bill from Her Majesty’s Revenue and Customs (HMRC) notifying him of an underpayment.

An underpayment of tax can occur if an employee’s income increases but he continues to pay tax at the wrong tax code.  A common example is where the employee begins to receive a pension from one employer, but then starts work in a new job.  An underpayment might also arise if an employee gets a company benefit, such as a car or medical insurance, and HMRC do not know about it right away.

If the underpayment is less than £3,000, then the employee can either pay back the amount owed through his tax code or make a voluntary direct payment.  If it is likely the employee will struggle to pay back the underpayment, he can ask HMRC to let him spread the payments over a period of up to three years.

Of course, an employee might think that the underpayment was not his fault and feel that he should not be responsible for rectifying someone else’s mistake.  If he can prove the underpayment was due to an error made by his employer, then he might avoid having to pay back the sum owed.  The first step is to ask the employer to check their records to see whether they made a mistake in the handling of PAYE.  Alternatively, the employee can ask HMRC to carry out an employer error enquiry.

An underpayment might also be due to HMRC failing to use information provided to it, such as details of a new job or receipt of a pension.  If the employee thinks this is the reason for the underpayment, he will have to submit an Extra Statutory Concession to HMRC.

Photo: Egrien

Auto-enrolment means more people will be saving into workplace pensions.  However, as our December 2012 article on auto-enrolment noted, one of the drawbacks for employees is the possibility of being enrolled on a scheme that has high charges, as these fees erode the size of the employee’s pension pot.

The OFT has recognised this issue and decided to examine the value for money offered by workplace pensions and the size of the pension savers will end up with at retirement.  Among the issues being investigated by the OFT are:

The OFT aims to complete the study by August 2013.