18th October 2016 Human rights law may limit Government’s freedom to legislate post-Brexit

Will Brexit mean the UK Government has a free hand to change pensions law? We don’t need the Great Repeal Bill to retain all existing EU legislation in UK law because we’ve written almost all of it into UK law already. Some of it is possibly “gold-plated” meaning we have gone further than required. The things that aren’t written in probably won’t be written in now, for example the requirements for VAT recovery on admin expenses. Some rules like data protection seem likely to be part of any trade deal whether or not they override UK law. The question is, having got all this in UK law, can we repeal it

The question is, having got all this in UK law, can we repeal it post Brexit? What is interesting for pension schemes is whether the human rights framework allows repeal. This is a separate issue about sovereignty. I doubt the UK would want to repeal laws like equal pay and discrimination even if they are no longer required by the EU. But there is a legitimate debate about affordability, conditional indexation, RPI/CPI and so on. There are lawful ways of reducing benefits – with member consent, or using flexibility that is baked into the member’s rights. Finding new ways would require section 67 Pensions Act 1995 to be changed. And it is surprisingly difficult to achieve distress solutions that deliver better benefits for everyone than PPF entry. These issues may just be too hot to handle. However if the Government is motivated to allow more flexibility on benefits, in order to help struggling

These issues may just be too hot to handle. However if the Government is motivated to allow more flexibility on benefits, in order to help struggling employers to balance the books, it will have to operate within constraints in UK law that are not driven by the EU. The Human Rights Act 1998 protects the peaceful enjoyment of property, reflecting the provision in the European Convention on Human Rights. Accrued pension rights would seem to be property. The right is not absolute though and the principle of proportionality is central to the Convention. There are carve-outs where it is in the public interest, or to secure the payment of taxes or penalties. The Human Rights Act may not survive Brexit. The Conservative manifesto commitment to replace it with a British Bill of Rights seems to be current policy. The Conservative Party document on the proposals for change said the Conservatives would write the Convention protections into UK law (though that may not be current policy). The Convention provisions limit the Government’s ability to allow accrued rights to be reduced. Even if the UK ceased to be a signatory to the Convention, it is likely that property rights would continue to be protected by law.

The Human Rights Act may not survive Brexit. The Conservative manifesto commitment to replace it with a British Bill of Rights seems to be current policy. The Conservative Party document on the proposals for change said the Conservatives would write the Convention protections into UK law (though that may not be current policy). The Convention provisions limit the Government’s ability to allow accrued rights to be reduced. Even if the UK ceased to be a signatory to the Convention, it is likely that property rights would continue to be protected by law. It isn’t very sensible that schemes differ on indexation because of the “drafting lottery” but benefits have been earned. If the pensions industry (or perhaps British industry) seriously wants to explore the possibility of levelling the playing field it is going to have to engage with the Government in considering the right balance to strike on human rights. The forthcoming British Bill of Rights might present an opportunity to have that debate.”

It isn’t very sensible that schemes differ on indexation because of the “drafting lottery” but benefits have been earned. If the pensions industry (or perhaps British industry) seriously wants to explore the possibility of levelling the playing field it is going to have to engage with the Government in considering the right balance to strike on human rights. The forthcoming British Bill of Rights might present an opportunity to have that debate.”

The views in this article are intended for general information purposes only and should not be used as a substitute for professional advice. ARC Pensions Law and the author(s) are not responsible for any direct or indirect result arising from any reliance placed on content, including any loss, and exclude liability to the full extent. Always seek appropriate legal advice from a suitably qualified lawyer before taking, or avoiding taking, any action. If you have any questions on the points raised in the above, please do not hesitate to get in touch.