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What age limits are permissible in private pension schemes?

According to the Federal Labour Court (Bundesarbeitsgericht, BAG – docket number: 3 AZR 69/12) a company´s private pension scheme may not exclude an employee´s entitlement to a private pension where the defined vesting period of ten years does not expire before the employee reaches the age of 55.   

Age limits are allowed in general

Private pension systems may define age limits which exclude the participation of groups of employees who have already reached a set age. e.g., it is permitted to determine in the framework of a company´s pension system that employees may not participate in the system after the age of 50 (Federal Labour, BAG – docket number: 3 AZR 356/12).  However, such age limits must be reasonable in accordance with the regulations set out in section 10 para. 2 of the German Anti-Discrimination Act (Allgemeines Gleichbehandlungsgesetz).

Unreasonable combination of vesting period and age limit

The age limit must not only be assessed separately, but the impact of a vesting period, which is common and permitted in private pension schemes, must also be considered.  The disputed clause in this case meant that an employee would be barred from the pension scheme if starting employment after the age of 45, as the vesting period of ten years could not be achieved before the employee´s 55th birthday.  This regulation was deemed discriminatory contrary to German legislation as there was no justification for such age limit. Hence, the plaintiff successfully claimed for a private pension once she completed her retirement age.