The first day of 1993 was the effective deadline set in a 1986 European Commission directive as the last possible date for member states to introduce equal treatment provisions in occupational pensions. Among other things, the new rules mean that women taking paid maternity leave would be able to maintain full company pension rights during this period.
Up to now, company pension schemes have varied in their treatment of maternity leave. The best already treat periods of paid leave as fully pensionable service, with benefits accruing to the woman at normal full-salary level. However, it has been more common for schemes to view the maternity leave period as a non-pensionable gap in service, reducing the woman's ultimate pension entitlement as a result. Some schemes have even withdrawn the standard death-in-service benefits during maternity leave so that, were a woman employee to die in childbirth, her dependants would have no entitlement to help.
The EC rules are designed to ensure that all occupational schemes treat paid maternity leave as fully pensionable service, irrespective of whether women return to work afterwards or not. Benefits continue to be credited at the ordinary salary level, although pension contributions are based on the actual amount of maternity pay being paid. However, these rights (which also extend to men on paid paternity leave) do not cover periods of leave that are unpaid.
The EC measures were incorporated into British law in 1989, but with the start date deferred until the start of this year. However, two weeks before Christmas, Ann Widdecombe, junior social security minister, announced that the new legislation would not be brought into force after all.
The Government's decision has left the Equal Opportunities Commission surprised and disappointed. 'We haven't received any notification that they were planning to do this. From the point of view of the EOC, we would like to see women's pensions protected as effectively as possible during pregnancy,' said Lorraine Fletcher, head of pensions at the EOC.
Whether the Government has legal grounds for its action is debatable. Mrs Widdecombe referred to the 1990 'Barber' judgment of the European Court of Justice. This landmark decision pronounced that pension rights are a form of pay (and as such are bound by the European Community's equal pay rules). But it also left many practical details over the equalisation of pension rights unresolved. The Government argues that Barber has superseded parts of the original 1986 EC directive and says it will introduce new legislation when the European Court has clarified the issues.
Not everyone sees a connection, however, between the Barber judgment and maternity pension rights. 'I think it is a great pity that the matter of the protection of women's pension rights during maternity leave should have been dragged into the general post-Barber uncertainty,' said Ms Fletcher.
The situation is still further confused by the more recent agreement to establish a standard EC-wide minimum of 14 weeks' paid maternity leave for women employees. This is being included as a clause in the Trade Union Reform and Employment Rights Bill currently before Parliament.
It could just be, however, that Mrs Widdecombe's pre-Christmas announcement was deliberately timed to be last-minute. Alex Sinclair, a manager with the pension advisers Alexander Consulting Group, said occupational pension schemes had to prepare for the changes in good time. 'My experience has been that schemes have been implementing the requirements or setting them up for 1 January and cannot now pull the plug.'
So women may find that while the statutory protection is missing, their occupational pension rights during maternity leave have nevertheless been improved. But it is wise to check the arrangements with the pension scheme manager.
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