Executive Summary

The CJEU held that on the face of it, the member announcement was not sufficient to close the Barber window because (a) it did not meet the requirement for equalisation measures to be "immediate and full", and (b) it did not satisfy the need for legal certainty, ie for the persons concerned to know precisely their rights and obligations.  However, the CJEU went on to say that measures to end discrimination may, exceptionally, be adopted with retrospective effect provided they:

• respect the "legitimate expectations" of the persons concerned; and
• are warranted by an "overriding reason in the public interest".  

Detailed Summary

On 7 October 2019, the Court of Justice of the European Union (CJEU) handed down its judgment in the case of Safeway v Newton which considers when the Safeway pension scheme's "Barber window" closed.

The case of Barber established the principle that differing retirement dates for men and women breach EU law. Subsequent cases established the principle that for accrual from 17 May 1990, the date of the Barber judgment, until benefits have been equalised, benefits accrue on the more favourable basis. This period is often referred to as the "Barber window".  

The Safeway scheme rules required amendments to be made by deed, but provided that amendments could take effect retrospectively from the date of a prior written announcement to members.  A member announcement regarding equalisation was issued in 1991, but no deed of amendment documenting the change was executed until 1996, raising the issue of whether the Barber window closed in 1991 or 1996.

The CJEU held that on the face of it, the member announcement was not sufficient to close the Barber window because (a) it did not meet the requirement for equalisation measures to be "immediate and full", and (b) it did not satisfy the need for legal certainty, ie for the persons concerned to know precisely their rights and obligations.  However, the CJEU went on to say that measures to end discrimination may, exceptionally, be adopted with retrospective effect provided they:

• respect the "legitimate expectations" of the persons concerned; and
• are warranted by an "overriding reason in the public interest".  

The court said that a risk of seriously undermining the financial balance of the pension scheme concerned could amount to an "overriding reason in the public interest".  It noted that when the Court of Appeal referred the case to it, the court order referred to the financial consequences of the dispute amounting to £100 million, but did not state that retrospective equalisation was necessary to prevent the financial balance of the pension scheme from being seriously undermined.  The CJEU said that on the face of it there appeared to be no objective justification for retrospective equalisation.  However, it held that this was a matter for the Court of Appeal to verify.

Our thoughts

The CJEU's judgment said that it was "settled case law" that the risk of seriously undermining the financial balance of a pension scheme could amount to an overriding public interest reason to justify retrospective equalisation measures.  However, the cases to which the CJEU refers in support of such a principle relate to social security systems rather than private pension schemes, so the CJEU's approach does appear to mark a new development, albeit one that is only likely to be relevant to a small number of schemes.  A key feature of this case was that it related to a period before 6 April 1997 when section 67 of the Pensions Act 1995 came into force.  Section 67 now generally prevents amendments which retrospectively reduce accrued rights.