Do occupational pension schemes entail indirect discrimination on grounds of sex?

Occupational pension schemes do not discriminate directly between the sexes. There are however provisions that lead to indirect disadvantages for women. This was the conclusion of a seminar in Sweden in November 1997, where both statutory schemes and agreed pension systems were subject to a thorough analysis. The Equal Opportunities Ombudsman will now investigate if these rules are justified by objective factors unrelated to sex.

Both state social security and occupational social security schemes in Sweden are based on the assumption that adults of both sexes earn their own living. Therefore every worker has his or her own rights, irrespective of civil status or family situation. Formally, the regulations make no distinction between men and women. It is nevertheless a fact that women on average have less money at their disposal when they are ill, when they become pensioners etc. One apparent explanation is that that their earnings, to which their benefits are related, are lower than men's average earnings. Their lifetime incomes also tend to be smaller than men's, as more women work part-time at least during some periods of their life.

However, are there also provisions in the social security schemes that lead to disadvantages for women (or for men), in spite of their formal neutrality? And if so, are these provisions justified by objective factors or do they entail sex discrimination? These questions were analysed during two days at a seminar arranged by the Equal Opportunities Ombudsman (JämO) and the Faculty of Law at the Gothenburg Business School in November 1997. As far as is known, this was the first time that Swedish occupational as well as statutory social security schemes were thoroughly analysed from this point of view.

In Sweden, all employers bound by collective agreements have undertaken to insure their workers in different occupational social security schemes, of which the most important are the supplementary pensions schemes. Four collective agreements on pensions cover the great majority of workers:

  • the pension plan for state employees (PA-91);
  • the collective agreement on pensions for employees in municipalities and county councils (PA-KL);
  • the supplementary pension for industry and commerce (ITP), which covers white-collar workers in private companies; and
  • the pension agreed between the SAF employers' organisation and LO union confederation (avtalspension SAF-LO), which covers blue-collar workers in private companies

As the agreements cover whole sectors, workers can remain in the same system even when they change employers, and the transaction costs are low. The contributions to the funding are made by the employers.

Limits for access

The first three of the abovementioned pension agreements do not cover those who work less than 16 hours a week or 40% of the full-time equivalent. PA-KL contains a special provision for cases where a person has two employments of 10 hours each with the same employer. Then both may be counted as one for pension purposes, but the worker has no absolute right to have them added to each other.

All three collective agreements also, to a certain extent, exclude those who are employed on temporary contracts: PA-KL applies only to those employed for at least three consecutive months; state employees have to work at least six months in all in order to be affiliated to the occupational pension scheme; and white-collar workers in private companies do not acquire full rights under the ITP scheme until they have worked for 12 months and have reached the age of 28 years.

The avtalspension SAF-LOis a quite new scheme, which replaced the previous one in 1996. According to the new rules, the supplementary pension is based on all incomes that a person earns from his or her 28th birthday, whether this is from part-time or full time work or from temporary or permanent employment.

There is no doubt that the part-time limits exclude more women than men. It may also be that the exclusion of temporarily employed persons affects women to a greater extent, but that is more uncertain.

Objectively justified?

So what are the motives behind these limits? None of the experts from employers' organisations and trade unions could give a definite answer. Rules of this kind have been part of the pension schemes so long that few persons remember why they were introduced. Professor Lotta Westerhäll from the Gothenburg School of Business however presumed that they are influenced by the statutory schemes, which are designed to protect those who are considered as "established" in the labour market.

The suggestion that the exclusion of part-time workers could be justified by high transaction costs was rejected, as those costs are very small thanks to the size of the Swedish systems.

Having come so far, the seminar had to leave unanswered the question of whether the Swedish social security schemes are consistent with the principles of equal pay and equal treatment. Deputy Equal Opportunities Ombudsman Lise Bergh, who was surprised to learn that they contain so many provisions that might affect men and women differently, closed the seminar by urging the labour market organisations to scrutinise their collective agreements from an equal opportunities point of view. JämO, for its part, will also continue analysing the pension schemes as well as the other social security schemes discussed.


The question of whether Swedish occupational social security schemes are consistent with the principle of equal pay as interpreted by the Court of Justice of the European Communities requires further investigation. Regardless of the answer to this question it seems however that some of the provisions may need to be reviewed in the light of today's labour market, where many workers have to acquiesce in being employed on short-term contracts or in other forms of "atypical" employment relationships. This is true irrespective of whether it is a women's problem or a problem for both women and men. (Kerstin Ahlberg, NIWL)

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