No discrimination of disabled people in case of reduction of occupational pensions because of prematurely claiming

By judgment of 13 October 2016 (BAG, docket number 3 AZR 439/15), the Federal Labour Court ruled that a reduction of occupational pension payments due to prematurely claiming prior to reaching the fixed retirement age as provided for in the pension plan does not constitute discrimination on grounds of disability according to the German General Law on equal treatment (Allgemeines Gleichbehandlungsgesetzt – AGG). 

The employee, classified as disabled, was in an employment relationship until April 2013. From May 2013, the employee received both a statutory old age pension payment for disabled people from the German Statutory Pension Insurance and an occupational pension payment from the employer. The occupational pension payment was subject to a reduction, which was a result of an amendment of the pension plan, according to which an employee’s occupational pension payment is reduced by 0.4 percent for every month of claiming prematurely.

The Federal Labour Court ruled that there is no discrimination against the employee linked to his disability, because the fixed retirement age and the corresponding provisions in the pension plan concerning a reduction of occupational pension payments have been introduced for all employees, not differentiating between disabled employees and non-disabled employees. The employee is treated in the same way as each employee in a comparable case, regardless of his disability. The occupational pension payments of non-disabled people will also be reduced when claiming prematurely. The employee also cannot rely on the fact that from experience disabled employees tend to retire earlier than non-disabled employees, because the longer an employee works, the higher is their performance. Considering an occupational pension payment as a benefit for an employee’s performance, the situations differ significantly from one another and therefore cannot be subject to discrimination.

When creating a pension plan, employers always have to take into consideration the prohibition on discrimination according to the German General Law on equal treatment. Regarding this, there are many questions still open and unclear, for example whether it is possible to exclude employees from pension entitlements because of disability in certain cases. Relevant jurisdiction has to be monitored carefully.