A difference of pension contributions on grounds of age is legitimate if the difference is appropriate and necessary to achieve a legitimate aim (ECJ)

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Date:
27 Sep 2013

On 26 September 2013 the Court of Justice ruled on the question as to whether employer's contributions to an occupational pension scheme can vary with the scheme member's age.

On 26 September 2013 the Court of Justice ruled on the question as to whether employer's contributions to an occupational pension scheme can vary with the scheme member's age.

In the pension scheme concerned (a defined contribution plan), the employer's and employee's contribution increased with the employee's age.
Employer's contributions are remuneration and therefore fall under the scope of the Framework Directive (EU Directive 2000/78). As a matter of principle this Directive prohibits any difference in treatment on grounds of age. However, differences of treatment on grounds of age do not constitute discrimination, if, within the context of national law, they are objectively and reasonably justified by a legitimate aim ...and if the means of achieving that aim are appropriate and necessary.
The Court accepted the envisaged legitimate aim: enable older workers, who are affiliated to the scheme at a later stage in their working life, to build up reasonable retirement savings over a relatively short period of affiliation and include young workers in the same occupational pension scheme at an early stage, without having to sacrifice a significant part of their wages.
Next, the Court examined whether the difference in treatment on grounds of age was appropriate and necessary. In order to establish whether the difference in treatment meets these requirements the national court must consider whether the detriment resulting from the difference in treatment is off set by the benefits of the difference in treatment taking into account that lower employer contributions correspond with lower employee contributions.

> Action point
The question as to whether a difference in treatment on grounds of age within the framework of the Belgian legislation (the so-called "4 %-rule") would stand the proportionality test remains in our opinion unsolved. To be followed...