I’ve just been approached by a young employee (28) who advises that he regards our defined benefits pension scheme as being age discriminatory. After an initial temptation to ask him whether he realises how lucky he is to be offered a defined benefit scheme in todays world I now find myself having to construct a proper answer to his case.

Essentially he is arguing that although the company contributions are set as percentage of the salary bill the change in the actuarial value of his fund over the last year does not reflect any contributions from the company and is in fact slightly less than the percentage growth in the underlying fund plus his contributions.

His arguement is that our current arrangements are descriminatory against him on the grounds of age because if he was 30 years older with the same amount of service and otherwise on the same package we would be paying a far greater contribution to “his” pension. (He is of course mathemaically correct as the cost of 1/60th of his salary payable in 7 years is an awful lot more than the same benefit payable in 37!)

He has asked that we should either reduce the employee contributions for him (and presumabaly increase them for older workers) to “more fairly reflect” the amount of total contributions to his part of the fund, or allow him to have the “employer” contributions paid into an external fund.

I know he has to be wrong (hasn’t he?) – but can anybody help with the arguement.


John Farrell

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