£17bn bill for rights to back-dated pensions

Thousands of part-time workers have been granted back-dated pension rights in a European court ruling that is expected to cost British business up to £17bn.

Yesterday's decision by the European Court of Justice builds on a 1994 case that gave part-time workers the right to be included in pension schemes. Because so many part-time workers are women, employers who excluded such staff from their schemes were found guilty of sex discrimination under European law.

After that case, trade unions launched further legal action on behalf of 60,000 part-timers, mostly teachers, health workers, local government employees and bank staff, to have their pension rights extended beyond a two-year cut-off period set by the Government. Yesterday, the court ruled that the two-year limit was unlawful and extended the part-time workers' claims to 1976.

John Monks, general secretary of the Trades Union Congress, warmly welcomed the decision, adding: "It has been a long time coming but it has been well worth the wait... Before yesterday's ruling, many of the part-time workers affected by past pensions discrimination faced a very uncertain future."

But lawyers sounded a note of caution. Catherine Thorpe, a solicitor of Reynolds Porter Chamberlain, advising the National Association of Schoolmasters Union of Women Teachers (NASUWT), said: "Part-time workers will still have to prove sex discrimination [by being denied access to a pension scheme] in an employment tribunal in this country."

Twenty-two of the claimants were considered test cases by the Government, and the House of Lords passed them to the European Court in Luxembourg for a final ruling. These will now return to the Lords for them to apply the European judgment.

The government actuary's department estimated last year that a ruling in favour of back-dating could cost British employers £10bn to £17bn. Yesterday, the Confederation of British Industry said the judgment would place a "hugeadministrative burden" on companies. "In many cases the records will simply no longer exist. It could be an administrative nightmare," the CBI said.

The National Association of Pension Funds said there would be "significant administrative difficulties in confirming pay and employment records back to 1976".

Doug McAvoy, general secretary of the National Union of Teachers, said: "It's a pity the Government did not accept their duty to make good the many years of discrimination against part-time teachers six years ago. The Government could have saved a fortune in public money by accepting its responsibilities rather than fighting against women."

Many of the workers are pensioners or approaching retirement. The public employees union Unison, which has 10,000 members who are expected to benefit from the decision, described itself as being the driving force behind the claim. Dave Prentis, Unison's general secretary elect, said: "Today's decision means that instead of having to rely on means-tested state pensions many of our members will now be able to purchase a decent pension and enjoy more secure and comfortable retirement."

The court made clear that those making back-dated claims would themselves have to pay pension contributions to cover all the relevant periods of work before benefiting. Moreover, the decision has come too late for those who retired before1994.

It will also be of no help to anyone who has left it longer than six months after leaving work before making a claim for sex discrimination.