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Last Updated: Friday, 8 September 2006, 16:30 GMT 17:30 UK
Age rules on pensions postponed
James Purnell, minister for pensions reform
James Purnell says the delay will give schemes time to adjust
The government has postponed part of new laws against age discrimination that relate to pension schemes.

Rules outlawing ageism start on 1 October, but those affecting pension schemes will now start on 1 December.

The government says it wants to give employers and their pension schemes more time to digest the changes.

Overall the new laws will ban age discrimination in recruitment, employment and training and will stop most enforced retirement before 65.

'Responded fully'

James Purnell, the minister for pensions reform, said the delay to the parts affecting pension schemes was to give them more time to adjust.

"We have listened carefully to the concerns voiced by employers and decided to hold off on implementing the pensions aspects of the legislation to allow more time for the industry to get to grips with the changes," he said.

There will now be further consultation with the pensions industry, which could lead to changes in the way they affect pension schemes.

The CBI welcomed the delay to allow for more consultation on the matter, adding the government needs to set out any changes as soon as possible.

"We are pleased that the government has responded so fully to our concerns and look forward to seeing the amended regulations soon," said CBI deputy director general John Cridland.

"The regulations were badly drafted, often contradictory, and would have been bad news for employers and employees alike."

Shadow Work and Pensions Secretary, Philip Hammond, said: "This means people who thought that they would be safe from compulsory retirement before 65 may now find they will be out of work, as a result of these changes.

"Postponing seems extremely unfair and we will be asking the government, as a matter of urgency, to address the position of this group of people."

Many employers and pension schemes had made it clear they were not ready to comply with the new laws, after dealing with substantial administrative changes brought about by the simplification of pension scheme tax rules (A-Day) earlier this year.

Pension schemes

Many features of the way pension schemes operate involve judgements based on age.

So the government has already provided schemes with a long list of exemptions from the law so they can keep operating as normal.

But, it has become clear the rules will still need careful scrutiny and subsequent changes to comply with the new regulations.

Pension experts have also challenged the government's guidance, first published in April, that suggested staff could demand to be paid their full pension if they chose to work beyond a normal retirement age of 60.

The government says employers will have to agree to such requests; pension lawyers say pension schemes can choose to reject such a request under the new rules.

Profound changes

Overall, the new laws against age discrimination will be some of the most profound legislative changes affecting the workplace since laws were brought in banning discrimination on grounds of sex and race.

The laws ban direct and indirect age discrimination unless it can be "objectively justified" and they also make it illegal to harass or victimise anyone because of their age.

The driving force for the changes has been the government's obligation to incorporate in UK law the European Employment Directive of 2000 which has to be implemented by the end of this year.

The government also sees the new laws as a lever to help more older workers to stay in employment, thus reducing the burden of paying pensions on both the state and private pension schemes.

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