Women take pension fight to Europe: Workers are being penalised for retiring at their original contract date. Nic Cicutti reports

Click to follow
A GROUP of women will find out this week whether they have won a round in their legal battle to stop their employer removing part of their pension rights.

The Advocate General of the European Court will announce on Wednesday whether their firm, Avdel Systems, can force them to take a cut in their pension if they retire at 60 - the original retirement date.

Avdel has raised the 'normal' retirement date for women to 65, the same as men. Leaving before 65 counts as early retirement and imposes financial penalties.

Millions of women's pensions could be affected by his opinion, which is linked to a long-running legal debate over equal treatment of the sexes.

Research by the National Association of Pension Funds shows that in the past few years firms throughout the country have been raising women's pension ages from 60 to 65.

Employers say they are complying with a European Court decision in 1990, the Barber judgment, that pensions are part of pay. Therefore, males and females in company pension schemes should receive equal benefits, the court ruled.

But the Avdel women claim that they stand to lose up to 20 per cent of their pensions if they retire at the age laid down in their original contracts.

Avdel, which makes industrial fasteners, announced in 1991 that in order to meet the Barber judgment it would raise women's retirement age to 65.

Although women would still be able to retire early if they wanted, they would lose 4 per cent of their final pension for each year before reaching 65.

The women, whose firm is based at Welwyn Garden City, Herts, took their case to an industrial tribunal, which referred it to the European Court two years ago.

The Advocate General's opinion is not legally binding on the European Court, but is almost always followed.

Thirty women employed by a Leeds-based company, Cameron Iron Works, are waiting in the wings for a similar case to be heard.

Both cases are being backed by the Equal Opportunities Commission. Dorothy Robson, of its pensions unit, said: 'Our argument is that equality between men and women should not be carried out on the basis of levelling people's benefits downwards.

'If it is agreed that pensions are part of pay and pay should be equal, it is wrong to penalise women by making them work five extra years simply so that employers can say they are being treated the same as men.'

She denied that the cost would be prohibitive for employers. 'One of the aspects of the 1990 judgment is that equality is not deemded to apply before then,' she said.

'That means that employers would not have to fund their schemes before that date.'

Ron Spill, a pensions expert at Legal & General, the insurance company, said: 'An awful lot of firms have been telling women that if they want to go on full pensions they will have to wait five years.

'There are also a minority that have said to men that they too can leave at 60 and a reduction factor will not be applied as it is in the case of Avdel.'

Mike Brown, of the National Association of Pension Funds, said: 'I do not see how anyone can claim that employers would easily be able to fund retirement at 60.

'In a scheme funded in advance, we are talking about losing five years' investment returns, paying nearly five years' pensions more and paying in five years' less investment. For a pay-as-you-go scheme the situation is similar.'

Royal Life, an insurance company, has launched a scheme whereby savers who retire early can use a private pension scheme's lump sum to buy a temporary pension annuity between their actual retirement date and 65, when they get their state pension.

(Photograph omitted)

Looking for credit card or current account deals? Search here