Guide

Equal pay - the law and best practice

Equal pay and occupational pension schemes

Occupational pension schemes are subject to the equal pay for equal work principle. Most occupational pension schemes are trust-based schemes where the scheme is legally separate from the employer and is administered by trustees, who are bound to implement equal treatment between women and men. The benefits will be in the form of pensions and lump sums.

Equal treatment rule

The equal treatment rule operates to ensure that comparable women and men are treated equally in both access to and benefits of an occupational pension scheme. If an occupational pension scheme, or a term of it, is less favourable to a woman than it is to a male comparator, then the term is modified so that it is not less favourable.

However, if the trustees or managers of the scheme can show that the difference in treatment is because of a genuine material factor which is not the difference in sex, then the sex equality rule will not apply to that difference.

Women on paid maternity, adoption or shared parental leave are covered by the equal treatment rule. The only time a woman on maternity, adoption or shared parental leave may be treated differently is when she is on a period of unpaid leave, when she is not entitled to accrue occupational pension benefits.

The terms on which benefits are provided to dependants of members, and associated discretions, are also covered by the equal treatment rule.

Where people are treated differently according to their marital or civil partnership status, a woman must select a male comparator who has the same status. So if a scheme provides a particular benefit only to members who are married or in civil partnerships, a woman who is not married or in a civil partnership cannot choose a man who is married or in a civil partnership as a comparator for a claim.

There is an exception to the equal treatment rule that allows a difference in occupational pension contributions for women and men because of prescribed actuarial factors. For example, an employer may have to pay higher contributions for female than male employees because of their longer life expectancy.