Local Government Pension Scheme employers could face discrimination claims over concerns the scheme is not compliant with sharia law and staff are not offered an alternative.
A legal opinion commissioned by the LGPS advisory board found that a discrimination claim in an employment tribunal or a broader human rights-based challenge in the civil courts was possible.
The advisory board instructed Lydia Seymour, a specialist in pensions and employment law practice at the Outer Temple Chambers, after a number of LGPS administering authorities said members had opted out of the scheme on the basis of their religious belief.
The advisory board report says “these appear to be limited to those of the Muslim faith who are concerned that LGPS funds/investments are not sharia compliant/halal”.
It adds: “Employers are becoming concerned about potential discrimination claims being brought in the employment tribunal by employees who feel excluded from membership of the LGPS due to their religious beliefs. At present there is no alternative pension provision with their employer beyond the LGPS.”
It is believed that neither the LGPS not any other defined benefits scheme has so far faced a such claim.
The legal opinion suggests LGPS employers could have the legal power to offer alternative pension schemes, but the advisory board warned this would have “obvious implications” for employers and administering authorities, and could lead to staff choosing a cheaper scheme with worse benefits.
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