Equality Citation and commencement 1 This Order may be cited as the Equality Act (Age Exceptions for Pension Schemes) Order 2010 and shall come into force on 1st October 2010. Interpretation 2 1 In this Order, subject to paragraph (2), “occupational pension scheme” means an occupational pension scheme within the meaning of section 1 of the Pension Schemes Act 1993 . 2 In relation to rules, practices, actions or decisions identified at paragraph 1(a) of Schedule 1, “occupational pension scheme” means an occupational pension scheme within the meaning of section 1 of the Pension Schemes Act 1993 under which only retirement-benefit activities within the meaning of section 255(4) of the Pensions Act 2004 are carried out. 3 In this Order, “schemes” means an occupational pension scheme, construed in accordance with paragraphs (1) and (2). 4 In this Order, in relation to a scheme— “abolition date” means the day appointed for the commencement of section 15(1) of the Pensions Act 2007; “active member” has the meaning given by section 124 of the Pensions Act 1995 , but in paragraph 8 of Schedule 1 also includes an active member within the meaning of section 151(2) of the Finance Act ; “additional state retirement pension” means the additional pension in the Category A retirement pension within the meaning of sections 44 and 45 of the Social Security Contributions and Benefits Act 1992 ; “age related benefit” means benefit provided from a scheme to a member— on or following the member’s retirement (including early retirement on grounds of ill health or otherwise), on the member reaching a particular age, or on termination of the member’s service in an employment; “basic state retirement pension” means the basic pension in the Category A retirement pension within the meaning of section 44 of the Social Security Contributions and Benefits Act 1992; “block transfer” means a transfer in a single transaction or series of transactions from a scheme of all the sums or assets held for the purposes of, or representing, or derived from— all accrued rights under a scheme, contracted-out rights, or rights which are not contracted-out rights, relating to a period of continuous pensionable service (or pensionable service which is treated as continuous) or one or more of a number of separate periods of such pensionable service which relate to a member and at least one other member; “Contracted-out rights” are such rights under, or derived from, an occupational pension scheme as fall within the following categories— entitlement to payment of, or accrued rights to, guaranteed minimum pensions; or section 9(2B) rights; “death benefit” means benefit payable from a scheme in respect of a member, in consequence of that member’s death; “defined benefits arrangement” has the meaning given by section 152(6) of the Finance Act, but the reference in that section to an arrangement shall be read as referring to an arrangement in respect of a member under a scheme as defined in section 1 of the Pension Schemes Act 1993 rather than in respect of a member under a pension scheme as defined in section 150(1) of the Finance Act; “dependant” means a widow, widower or surviving civil partner, or a dependant as defined in the scheme rules; “early retirement pivot age” means, in relation to age related benefit provided under a scheme, an age specified in the scheme rules (or otherwise determined) as the earliest age at which entitlement arises— without consent (whether of an employer, trustee or managers of the scheme or otherwise), and without an actuarial reduction, but disregarding any special provision as to early payment on grounds of ill health or otherwise; “the Finance Act” means the Finance Act 2004 ; “guaranteed minimum pension” has the meaning given in section 8(2) of the Pension Schemes Act 1993 ; “late retirement pivot age” means an age specified in the scheme rules (or otherwise determined) above which benefit becomes payable with actuarial enhancement; “lower earnings limit” means the amount specified for the tax year in question in regulations made under section 5(1)(a)(i) of the Social Security Contributions and Benefits Act 1992 (earnings limits and thresholds for Class 1 contributions); “member” means any active member, deferred member, or pensioner member, but in paragraph 7 includes any active, deferred or pensioner member within the meaning of section 151(2) to (4) of the Finance Act; “money purchase arrangement” has the meaning given by section 152(2) of the Finance Act, but the reference in that section to an arrangement shall be read as referring to an arrangement in respect of a member under a scheme as defined in section 1 of the Pension Schemes Act 1993 rather than in respect of a member under a pension scheme as defined in section 150(1) of the Finance Act; “non-discrimination rule” means the rule in section 61 of the Equality Act 2010 as it applies to the protected characteristic of age under that Act; “normal pension age” has the meaning given by section 180 of the Pension Schemes Act 1993; “normal retirement age”, in relation to a member, means the age at which workers in the undertaking for which the member worked at the time of the member’s retirement, and who held the same kind of position as the member held at retirement, were normally required to retire; “pensionable pay” means that part of a member’s pay which counts as pensionable pay under the scheme rules; “prospective member” means any person who, under the terms of the person’s employment, or the scheme rules, or both— is able, at the person’s option, to become a member of the scheme, shall become so able if the person continues in the same employment for a sufficient period of time, shall be so admitted to it automatically unless the person makes an election not to become a member, or may be admitted to it subject to the consent of any person; “protected rights” has the meaning given in section 10 of the Pension Schemes Act 1993 as it had effect immediately prior to the abolition date ; “redundancy” means being dismissed by reason of redundancy for the purposes of the Employment Rights Act 1996 ; “relevant transfer” has the meaning given in— regulation 2(1) of the Transfer of Undertakings (Protection of Employment) Regulations 1981 (a relevant transfer), or as the case may be, regulation 2(1) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (a relevant transfer); “section 9(2B) rights” are— rights to the payment of pensions and accrued rights to pension (other than rights attributable to voluntary contributions) under a scheme contracted-out by virtue of section 9(2B) of the Pension Schemes Act 1993 , so far as attributable to an earner’s service in contracted-out employment on or after 6th April 1997; and where a transfer payment has been made to such a scheme, any rights arising under the scheme as a consequence of that payment which are derived directly or indirectly from— such rights as are referred to in sub-paragraph (a) under another scheme contracted-out by virtue of section 9(2B) of that Act; or protected rights under another occupational pension scheme or under a personal pension scheme attributable to payments or contributions in respect of employment on or after 6th April 1997 where the transfer took place before the abolition date ; “upper earnings limit” means the amount specified for the tax year in question in regulations made under section 5(1)(a)(iii) of the Social Security Contributions and Benefits Act 1992 (earnings limits and thresholds for Class 1 contributions). 5 In this Order, “registered pension scheme” has the meaning given by section 150(2) of the Finance Act, and references to contributions under a money purchase arrangement shall be construed as including amounts credited to a member’s account whether or not they reflect payments actually made under the scheme. Occupational pension schemes: excepted rules, practices, actions and decisions 3 It is not a breach of the non-discrimination rule for the employer, or the trustees or managers of a scheme, to maintain or use in relation to the scheme, a those rules, practices, actions or decisions set out in Schedule 1 ; or b rules, practices, actions or decisions as they relate to rights accrued, or benefits payable, in respect of periods of pensionable service prior to 1st December 2006 that would breach the non-discrimination rule but for this paragraph. Contributions by employers to personal pension schemes: excepted practices, actions and decisions 4 It is not an age contravention for the employer, in relation to the payment of contributions to any personal pension scheme in respect of a worker, to maintain or use those practices, actions or decisions set out in Schedule 2. Unlawfulness of rules, practices, actions or decisions 5 1 The inclusion of a rule, practice, action or decision in Schedule 1 (Occupational Pension Schemes: excepted rules, practices, actions or decisions) shall not be taken to mean that, but for the exemption in Schedule 1, the use or maintenance by an employer or the trustees or managers of a scheme of the rule, practice, action or decision in relation to the scheme, would be unlawful. 2 The inclusion of a practice, action or decision in Schedule 2 (Contributions by Employers to Personal Pension Schemes: excepted practices, actions or decisions) shall not be taken to mean that, but for the exemption in Schedule 2, the use or maintenance by an employer of the practice, action or decision in relation to the payment of contributions to a personal pension scheme in respect of a worker, would be unlawful. Length of service exceptions 6 1 Paragraph (2) is subject to paragraph (3). 2 In addition to the excepted rules, practices, actions or decisions contained in Schedules 1 and 2, none of the following is a breach of the non-discrimination rule or is an age contravention, as applicable— a any rule, practice, action or decision of the trustees or managers (“A”) of an occupational pension scheme regarding— i admission to that scheme (“admission terms”); or ii the accrual of, or eligibility for, any benefit under the scheme (“benefit terms”), where the admission terms or the benefit terms put a member (“B”) of the scheme at a disadvantage when compared with another member (“C”) if and to the extent that the disadvantage suffered by B is because B’s length of service with an employer (“D”) in relation to the scheme is less than that of C; b any rule, practice, action or decision of an employer (“E”) in relation to an occupational pension scheme regarding the admission terms or benefit terms where it puts a member (“F”) of that scheme at a disadvantage when compared with another member (“G”) if and to the extent that the disadvantage suffered by F is because F’s length of service with E is less than that of G; or c any practice, action or decision of an employer (“H”) regarding payment of contributions in respect of a worker (“I”) to a personal pension scheme or to a money purchase arrangement (“contribution terms”) where it puts I at a disadvantage when compared with another worker (“J”) if and to the extent that the disadvantage suffered by I is because I’s length of service with H is less than that of J. 3 Where B’s, or as the case may be, F’s or I’s, length of service exceeds 5 years and a length of service criterion in the admission terms or, as the case may be, the benefit terms or contribution terms, puts B or F or I at a disadvantage— a where paragraph (2)(a) applies, A— i must ask D to confirm whether the length of service criterion reasonably appears to D to fulfil a business need of D’s undertaking (for example by encouraging the loyalty or motivation, or rewarding the experience, of some or all of his workers); and ii may rely on D’s confirmation; b for the purposes of sub-paragraph (a)(i), D must— i calculate B’s length of service; ii provide A with details of B’s length of service; and iii respond to A’s request within a reasonable time; c where paragraph (2)(a) or (b) or (c) applies, it must reasonably appear to D or, as the case may be, E or H, that the length of service criterion applies in such a way that it fulfils a business need of his undertaking (for example by encouraging the loyalty or motivation, or rewarding the experience, of some or all of his workers). 4 When calculating B’s or, as the case may be, F’s or I’s, length of service, D or, as the case may be, E or H, must calculate— a the length of time the member or worker has been working for that employer doing work which that employer reasonably considers to be at or above a particular level (assessed by reference to the demands made on the member or worker, for example, in terms of effort, skills and decision making); or b the length of time the member or worker has been working for that employer in total, and it is for D or, as the case may be, E or H to decide which of sub-paragraphs (a) or (b) to use. 5 For the purposes of paragraph (4), D or, as the case may be, E or H, shall calculate the length of time a member or worker has been working for that employer in accordance with sub-paragraphs (4) to (6) of paragraph 10 of Schedule 9 to the Equality Act 2010 (benefits based on length of service) and any reference in those sub-paragraphs to— a “A” shall be read as if it were a reference to “D” or, as the case may be, “E” or “H”; and b “person” (except in the phrase “person other than A”) shall, where paragraph (2)(a) or (b) applies, be read as if it were a reference to “member”. 6 For the purposes of this article, a “member” shall include a “prospective member”. Signed by authority of the Secretary of State for Work and Pensions. Maria Miller Parliamentary Under-Secretary of State, Department for Work and Pensions 25th August 2010