Uppingham School v Shillcock 2

Reference: (2002) 52 PBLR

Mrs Shillcock was a part-time employee of the School. The rules of the pension scheme provided that to be eligible to join the Scheme, an employee had to earn more than the Lower Earnings Limit for National Insurance Contributions ("LEL"). The LEL was also deducted from pensionable salary for the purposes of calculating pension benefits. The scheme also provided a lump sum death benefit based on a multiple of annual salary. For the majority of her employment, she never earned above the LEL and therefore was not able to join the Scheme. She complained to the Pensions Ombudsman.

The Ombudsman determined that her exclusion from the Scheme amounted to unlawful indirect sex discrimination as the LEL offset adversely affected proportionately more women than men. The failure to comply with equal treatment provisions in the Pension Schemes Act and under European law amounted to maladministration. The Ombudsman directed that the trustees should arrange for her to be retrospectively admitted to the scheme and be provided with pension accrual that did not discriminate against her because of her low earnings.

The trustees appealed and the Ombudsman's decision was overturned. Neuberger J held that as the purpose of the LEL offset was to ensure broad integration between state scheme benefits and those provided under the scheme and the offset applied equally to all employees, there was no discrimination. The legislation did not "mandate any particular method by which pay should be calculated" and "as long as the method used by the scheme is not discriminatory, one sex cannot object that they would have done better against the other if a different method had been employed". Any resulting unfairness can be said to be balanced by the opportunity for those earning less than the LEL paying proportionately lower (or even no) contributions to the scheme, as well as being entitled to make voluntary Class 3 national insurance contributions so that a pension (albeit under the state system) based on earnings under the LEL is built up.