Occupational Pensions: European Court Judgment (Hansard, 28 November 1990)

§ The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley)
My Lords, there are no simple means by which an individual national government can resolve uncertainties to which particular European Court judgments give rise. We are aware of the difficulties facing occupational pension providers following the European Court judgment in the Barber case and are continuing to give close consideration to ways in which its implications may be clarified. In the meantime we recommend that those responsible for occupational pension schemes take legal advice on the implications for their scheme.

§ Baroness Turner of Camden
My Lords, I thank the Minister for that response. However, is he aware that the legal advice received by pensions consultants has been conflicting? Is he also aware that there seems to be a great deal of difference of opinion as to whether or not the effect of the judgment is retroactive? There is also confusion as to what schemes should now do. If they equalise their pension ages at 60 they could face difficulties because they are not allowed to introduce bridging pensions for men between the ages of 60 and 65. If they try to equalise the ages at 65 there will be difficulties with respect to women employees because many women will consider that their conditions have become worse. Is it possible to issue guidance to resolve the situation?

§ Lord Henley
My Lords, I agree with the noble Baroness that the ruling has left some areas unclear, particularly the extent to which it has retrospective 964 effect. The Government are considering carefully what needs to be done about the Barber judgment. We do not believe that it is for the Government to make pronouncements about the interpretation of the judgment. In the final resort it must be a matter for the European Court itself to clarify its own judgments. The Government will consider supporting any case which might provide clarification of the ruling.

§ Lord Stallard
My Lords, is the noble Lord aware that that is not a very satisfactory reply? It is almost the same reply that he gave many months ago when the issue was raised for the first time. If, as a result of the judgment, occupational pension schemes have to provide equal treatment for men and women and in particular equal pension ages, is it not essential that the state scheme should give a lead? What discussions are taking place about the equalisation of retirement ages in the state pension scheme and when will the Government be in a position to announce their decision?

§ Lord Henley
My Lords, the noble Lord knows perfectly well that the Barber case has nothing to do with the state scheme. The state scheme is specifically excluded under European law: the Barber case concerned occupational pension schemes and defined occupational schemes as pay rather than pensions. The noble Lord said that the judgment did, however, affect the state scheme because of the position regarding bridging pensions mentioned by his noble friend Lady Turner. The United Kingdom's permanent representative to the European Community has written to the Commission on behalf of the Government on this matter. We have not yet received a reply. When we receive a reply and the Commission's views are known we shall arrange for them to be made known to interested parties.

§ Lord Stallard
My Lords, I must come back to the point. The noble Lord says that the issue has nothing to do with the state pension scheme. The two cannot be divorced. It is almost impossible for occupational pension schemes to operate without taking account of the state pension scheme. The two are interlinked. Because pensions are a long-term business and need a lot of planning, pension schemes have to know what the Government plan to do about the state pension scheme.

§ Lord Henley
My Lords, I simply do not accept what the noble Lord says. They are totally separate. The Barber case made it quite clear that occupational pensions were deferred pay and therefore under Article 119 of the Treaty of Rome men and women had to be treated equally. Under European law it is possible to maintain separate pension ages. The noble Lord knows perfectly well what the Government's attitude is on the question of the state pension because I spoke on that matter earlier this year in response to the Select Committee report. I said that we recognised the arguments in favour of equalisation but stressed that nevertheless there were many problems relating to demographic and other matters which required careful consideration before we could come to a conclusion.

§ Baroness Seear
My Lords, does the noble Lord accept that this is a matter of very great importance to a great many people? It is not a party matter. We fully understand the Government's difficulties; on the other hand the whole position is extremely confused. The outcome will affect a great many people and it is very difficult for people planning occupational pension schemes to make sensible decisions. When will the Government be able to say that the position is clear enough for us to have a full debate on this extremely important matter? Will they please expedite the matter on a non-party basis?

§ Lord Henley
My Lords, I was trying to respond on a non-party basis. I am trying to make it clear that it is not for the Government to clarify a decision of the European Court of Justice. Only the European Court itself can clarify what was meant by the decision in the Barber case. As I said, we are quite prepared to involve ourselves if a suitable case can be found which would enable us to seek clarification from the European Court.

§ Lord Wedderburn of Charlton
My Lords, will the Minister address this further point? Do the Government not owe an obligation, as the government of a member state, always to consider the judgments of the European Court and to make sure that our domestic law is not out of line with what they understand to be the overriding obligations of the Community? The Minister admitted that the Government have considered the matter very carefully when he said that the Barber case applies to occupational pensions and not to the state scheme. Can the Government not give some indication of their general view of the case?

§ Lord Henley
My Lords, I said that the decision of the court in the Barber case—and I recommend that the noble Lord looks at it—is unclear, particularly as it affects the degree of retrospection. That is not a matter on which the Government can pronounce. It is for the court itself to clarify the extent to which the judgment is retrospective. In the meantime, as I have said, we advise all pension schemes to take advice as to how it affects individual schemes.

§ Lord Mishcon
My Lords, does the noble Lord realise that, as the noble Baroness, Lady Seear, and my noble friends on these Benches have said, this is a matter of great concern to a great many people? Does he not understand that it is not good enough to answer that only the European Court can define precisely what it meant and say whether its judgment is retrospective? The Government should take the initiative and bring the matter before the European Court, either by asking for a declaration or seeking some test case. Is he prepared to look into that and provide clarification of an issue which is at present confused?

§ Lord Henley
My Lords, I suspect that the noble Lord did not listen to me. I said quite clearly that the Government would seek clarification from the court if a suitable case could be found. The Government cannot go to the court and ask for a declaration. 966 Another case will have to come before the European Court. The Government will consider supporting such a case.

§ Lord Mishcon
My Lords, I hope that noble Lords will forgive me for returning to the Dispatch Box. This is an important matter. Is the noble Lord aware that there is a procedure by which one can obtain a declaration from the European Court on an issue which one puts before the European Court? Is it possible to create a test case immediately if that is the route by which he wants to go?

§ Lord Henley
My Lords, let me repeat that my understanding is that we can seek clarification if a suitable case can be found. We shall support that case if such a case can be found.

§ Lord Campbell of Alloway
My Lords, is my noble friend the Minister prepared to consider that perhaps there is an area here of serious misconception? Is he prepared to reconsider the position so that the matter is not just left to contradictory advice between individual advisements and that at least some authoritative interpretation, albeit temporary, is made by the Government in order that people understand until the situation changes? Does he agree that the present situation is far from satisfactory?

§ Lord Henley
My Lords, I made it quite clear that the Government accept that the present situation is unsatisfactory. As I said, the Government are considering carefully what needs to be done. We are in consultation with all the interested parties and with the European Commission. However, in the end, the matter must be clarified by the European Court itself.

§ Lord Harmar-Nicholls
My Lords, the noble Lord opposite, who is learned in these matters, indicated that a procedure exists whereby we can call upon the European Court to interpret its ruling, short of having a case. Will my noble friend confirm that there is such a procedure as indicated by the noble Lord?

§ Lord Henley
My Lords, I accept, as my noble friend said, that the noble Lord is learned in the law. My understanding is that we could only seek clarification by means of a test case. If I am wrong, I shall be the first to come back to the noble Lord and make the matter quite clear. However, my understanding is that we can only seek clarification by means of a test case.