Avid readers of Professional Pensions may have seen an ariticle in the 6th September edition regarding the case of Waddy v Foster Wheeler (yes, THAT Foster Wheeler – just can’t seem to keep out of the pension press can it??). I was asked to comment on the case just as I was rising from a Magistrates’ court sitting so I’m not sure my thoughts were fully cogent at the time!!

The significance of this case is that it concerns the rights of gay couples in a Civil Partnership to the same pension rights as heterosexual spouses. Now you may have thought that all this was sorted some time ago with the passing of legislation back in 2005 and it’s reenactment under the Equality Act 2010. But the more techically minded amongst you will also remember that there was an option available to schemes to only “equalise” benefits which accrued post December 2005. And that’s what many schemes did of course – largely to control costs for which funding had not been provided prior to then.

It seems (although in fact aspects of this case have settled outside of court so there is no formal trancript of events) that Foster Wheeler did not provide full benefits for Civil Partners. Mr Waddy and his partner Mr Skipp had been together for 40 years and entered a CP in 2006. The scheme having taken advantage of the exception has now agreed to provide full benefits in this case but maintain that the scheme rules were entirely lawful.

Liberty who took the case on Mr Waddy’s behalf continue to maintain that the Equality Act exception is unlawful both in respect of EU law and under the European Convention of Human Rights. The point will be argued further in an Employment Tribunal in January 2012 and we await the outcome with interest.

I have to admit that even when the legislation was first passed, I did just wonder whether the temporal limitation would ever be challenged. Now it seems that it is, I suspect that if Liberty lose at the ET, that won’t be the end of the matter. It is amazing that in the second decade of the 21st Century we should still be in doubt as to the intent and validity of equal rights. But that’s pensions for you. Why make things simple when it’s so much fun to make it complicated…

In an earlier life I was the Legal Director of the Occupational Pensions Regulatory Authority, the predecessor body to the current Pension Regulator. One of the issues which took up a considerable amount of management and investigatory time concerned a scam called ‘Pension Liberation’. It worked like this.

Gullible people desperate for cash would be encouraged to transfer out of their safe often well funded DB scheme into a ‘fake’ pension scheme, set up by the scammers. At it’s most sophisticated, they would even be given false contracts of employment so that the Inland Revenue (as it then was) would think that there was a genuine occupational scheme. For a significant fee, the ‘employee’ would then be given a cash sum out of the scheme – all totally illegal of course. The scammers had up to 50% of the transfer value, sometimes more as the admin fee, the ‘member’ got his hands on some cash but at a significant cost. And when the Revenue finally caught up with them, as they inevitably did, a massive tax penalty to boot. So most of pension savings could be lost leaving the victim ‘member’ to a very poor old age.

Prosecutions supported by OPRA at the end of the 1990’s largely put a stop to these scams, but sadly it appears that there is a new kid on the block albeit in another guise. They are called ‘Pension Reciprocation Plans’ and work by allowing people under the age of 55 to borrow up to half the value of their fund after it’s been transferred into a ‘Master Trust’ Pension Plan which – it is claimed – fall outside the legislation which would otherwise prevent members taking loans from their own scheme. Half of the funds – it’s only sold to those with a transfer value of £20,000 or more – no point going after the paupers now is it – are held in a highly risky unregulated property investment vehicle in a lax tax friendly jurisdiction such as the British Virgin Islands, the other half in a non tradeable fixed interest security. Initial fees are also high at 5% with an annual management charge of 1% and and interest rate on the loan of 5% over Bank of England Base.

As such it is not for the feint hearted and the financially unsophisticated, and while it appears to be ‘legit’ the FSA are being urged to look into these plans. If they came to me with this as a possible ‘investment’ opportunity I would not touch it with a 50 foot bargepole…and dear readers, while I am of course not authorised to give financial advice, I suggest you should think very very carefully if someone approaches you with this ‘too good to be true’ wheeze…it probably is.

Once again Europe has spoken and this time it’s the women who will pay – well sort of. The latest diktat from the ECJ has declared that it will no longer be legal for insurance companies to use sex based factors when pricing products whether that be car insurance, life insurance or (and this is the pension bit folks) annuities. I can hear my actuarial friends and colleagues sobbing into their modelling spreadsheets even as I type!

But in every cloud there is just the glimmer of a silver lining although that may to some extent depend on which side of the sexual divide you sit. The bad news is that almost certainly most insurance premiums for women will increase – I mean honestly, do you really think that premiums will be levelled down for men? There may just I suppose be a meeting in the middle but I doubt it.

Bur the good news for women is that ironically the cost of annuity purchase may fall. Why? Simply because in the past, since women on the whole live longer than men, the price was higher as they would be paid for longer. This will no longer be permitted as presumably the ECJ has decided that we will all live for the same length of time and nature can go to hell in a handbasket – an ecologically sound and politically correct handbasket of course. At least they have been generous *ahem* and we have until 21 December 2012 to sort out the mess they’ve left us with

But the reality of course is this. Women DO generally live longer than men. That is nature, it is not sex discrimination. And young men generally DO want to show off to their mates in souped up old bangers – that is statistically proven and those raging hormones just have to get an outlet somehow. Driving stupidly resulting in accidents seems to be one of them.

The only sensible way through this apparent dilemma might be to introduce individual pricing based not just on sex but on particular circumstance and statistical evidence. And that will come at a cost. But it is at least fair – something that the ECJ seems confused about. I will leave it to my very clever actuarial friends to work out the detail – my mathematical ability ends with the counting of my fingers and toes!!

Bad news story of the week is the proposal leaked by the Daily Telegraph today (24 September) that the Pensions and PPF Ombudsman Service is to be merged with the Pension Regulator. As a consequence, the Pensions Advisory Service is to be abolished. This is a seriously bad idea for a number of reasons. Here are just a few.

1. tPR is very nearly unfit for purpose. It makes orders such as Financial Support Directions on Lehman Bros subsidiaries that cannot be enforced in all likelihood. It is seemingly unable to attract and recruit a new Chief Executive or Chairman. It is well past it’s ‘use by’ date and needs a radical rethink.

2. Why on earth would the PO be a good fit with tPR? Just because they both have ‘pensions’ in their titles does not mean that they are a match made in heaven.

3. There is already a very good Financial Ombudsman Service. Surely the PO would sit far more comfortably there as was previously suggested a few years ago. An Ombudsman is not and should never act as a Regulator as Tony King the current Pensions Ombudsman so rightly has said. Merging it with the regulator of pension schemes would be a severely retrograde step. Merging with the FOS however may well achieve some cost saving (which is of course what this is all about), although I doubt frankly that it would be much overall.

4. The disbanding of TPAS would remove a vital free advisory resource for the general public. Pensions are a complicated thing. TPAS through it’s volunteers provides excellent FREE guidance to individuals. Where is the Big Society in this proposal then?

I sincerely hope the Government thinks again about this particular idea. There are a lot of quangos that need sorting out. But pensions have had quite enough trauma…overmeddling with these two respected industry bodies would simply add salt to the wound.

Just a short one this week in that I was interviewed by Lexis/Nexis the legal database, for commentary on St Vince of Cable’s plan to simplify legislation by ensuring a One In One Out approach. Here’s a link to the article. Call me an old cynic if you like but sometimes a glass half empty is exactly that. I’m off on my hols now for a couple of weeks. Lying on a beach in the Caribbean with a good friend, good food and a tall glass of something naughty. Now that glass will certainly be half full! See you in September.

http://lexisweb.co.uk/groups/employment/blog/archive/2010/8/16/21482.aspx

A slight departure today from the usual pension stuff to do a bit of unashamed advertising for an extremely funny book!!

Anyone who might have been avid followers of Baby Barista in the Times before it hid behind its paywall, may be interested to know that advance copies of “Law and Disorder: Confessions of Pupil Barrister” have just arrived.

This is a new edition of “BabyBarista and the Art of War” which was described by broadcaster Jeremy Vine as “a wonderful, racing read – well-drawn, smartly plotted and laugh out loud” and by The Times as “a cross between The Talented Mr Ripley, Rumpole and Bridget Jones’s Diary”. It follow’s BabyBarista’s fight for tenancy during his first year in chambers. It is officially released on 2 August and can be pre-ordered at www.amazon.co.uk. Tim Kevan is a great writer and I will be reviewing this on here once I get my paws on a copy!! I am madly in love with ‘Old Ruin’ despite his great age – he is a man of wisdom and cuddlyness!

I have added a link to the Baby Barista blog and if there are any Guardianistas amongst my readership, you may know that BB is now regularly appearing there. The cartoons are provided by the wonderful Alex Williams, and If you want to get a daily fix of amusement at the expense of the ‘Senior Branch’ of the legal profession (as they like to think but we solicitors know better!!) then I can thoroughly recommend you go out and spend a very tiny proportion of your pension or erstwhile contributions thereto!! See I got pensions in there somewhere!!