EUROPE – Discrimination on the grounds of age and sexual orientation is set to become the next big issue for pension funds in Europe, according to UK consultancy firm, William M Mercer.

Mercer says that the EU Directive for Equal Treatment in Employment and Occupation, to be adopted by member states by December 2003, could have major implications for pension plans across Europe, especially the UK, the Netherlands and Ireland, which have highly developed occupational pension schemes.

Mercer claims that the provisions for anti-ageism are particularly stringent, since they prohibit discrimination to both older and younger workers. “Compared to the US law, which concentrates on protecting older workers, the EU equivalent is a double-edged sword,” says Paul Kelly, European partner at Mercer in London.

He adds : “The wording of the directive is quite imprecise in places and open to interpretation.
“ Inevitably we will see a string of legal cases seeking clarification.”

He suggests that the impact on defined benefit schemes will be a major cause for debate, since the cost and value of these schemes rises with age and could be seen as discriminatory.

Discrimination against homosexuals is likely to be less direct, says Mercer, as the debate will centre around the level of benefits given to spouses and dependent children.
“Occupational pension schemes could be found to discriminate indirectly against homosexual employees as they are less likely to have children. Marital status will also become an issue,” comments Kelly.