'Immensely Favourable' Pension Scheme Under Tribunal Spotlight
The age of financial realism has seen many pension schemes that were perceived as providing overly generous benefits closed to new entrants. A recent case concerned the legal consequences of a scheme that enabled a university technician to retire on ill-health grounds at the age of 38 and to receive a pension calculated on the basis that he had worked until he was 67 (The Trustees of Swansea University Pension and Assurance Scheme and Another v Williams).
Mr Williams suffered from a number of serious psychological conditions, including Tourette's syndrome, obsessive compulsive disorder and depression. There was no dispute that he had become permanently incapable of doing his job before his early retirement. The scheme entitled him to receive a pension as if he had worked on until retirement age, without any actuarial reduction for accelerated receipt.
For some time prior to his retirement, Mr Williams had been working part time, owing to his condition, and his pension was calculated on that basis. However, the Employment Tribunal (ET) subsequently found that this amounted to disability discrimination in breach of the Equality Act 2010.
In allowing the university's appeal, the Employment Appeal Tribunal (EAT) noted that the terms of the scheme were 'immensely favourable' to Mr Williams. The ET had applied the wrong legal test, adopted the wrong approach and, when considering the discrimination issue, had failed to recognise that anyone who could legitimately claim ill-health retirement under the scheme would inevitably be disabled.
The ET had also applied inappropriate analogies to the case, and its decision that Mr Williams had suffered unfavourable treatment because of something arising in consequence of his disability could not stand.
The appeal was therefore allowed and the case remitted to a fresh ET for a complete re-hearing.