How will the Equality Bill affect your finances?
The government’s Equality Bill, first promised in its manifesto over a decade ago, has now been published and is expected to come into force from autumn 2010.
However, this is subject to the Bill being passed through Parliament, and the measures within it are likely to be heavily debated and amended before they become law – a process that could take years.
Pat Healy, vice president of the National Pensioners Convention, says: “The devil will be in the detail of the bill and with a possible delay of up to five years before this legislation takes effect, millions of older patients will remain second-class citizens.”
The Bill aims to strengthen equality laws in the UK, tackle discrimination in the workplace and in the provision of goods and services – including financial products.
Age Concern and Help the Aged say that millions of people suffer age discrimination on a daily basis, despite laws already in place to get rid of ageism from the workplace. Mitchell says that older members of society continue to encounter discrimination when it comes to accessing goods, facilities and services such as insurance and healthcare.
Some measures proposed in the Equality Bill:
* Banning age discrimination outside the workplace
* Introducing gender pay reports
* Strengthening the powers of employment tribunals
* Protecting carers from discrimination
* Strengthening protection from discrimination for disabled people
Insurance and financial products
Age is one of a number of factors looked at by insurers to assess risk and price appropriately, especially for travel and car insurance policies. While it is generally agreed that a customer’s risk does increase with age (or the opposite when it comes to new drivers and car insurance) there are concerns that insurers are not transparent enough with pricing.
According to moneysupermarket.com, travel insurance more than doubles for people aged over 66 looking for an annual multi-trip policy. Young drivers, meanwhile, face paying more than 50% more for cover.
Malcolm Tarling, spokesman for the Association of British Insurers (ABI), defends the use of age-based pricing: “The average travel insurance claim for someone over 65 is nearly three-and-a-half times higher than for people under the age of 50.”
Age is also relevant to motor insurance: “It’s clear that younger drivers are a higher-risk group, but elderly drivers also represent a higher risk,” says Tarling. “The average motor insurance claim made by someone over 80 is nearly 50% higher than one made by someone aged 60.”
However, Age Concern and Help the Aged argue that the practice of using age bands to price insurance premiums is discriminatory. While they acknowledge the increased risk older customers present, the charities believe that age thresholds, such as 75 or 80, lead to “unreasonable and disproportionate” increases in premiums.
They also claim that many insurers operate upper age limits for motor and travel insurance, which means older people are rejected out of hand for insurance cover. Joint research found that one in 10 people aged over 75 is refused motor insurance outright, while one in five cannot get standard travel insurance.
The Equality Bill as it currently stands states that “older people must not be written off or denied access to medical treatment, financial insurance or other goods and services because of their age”.
However, Michelle Mitchell, charity director for Age Concern and Help the Aged, says this does not go far enough.
“The Bill only gives ministers the power to ban age discrimination in services if they wish,” she explains. “We want to see an unbreakable legal commitment to introduce new rights, across the public and private sectors. Each day older people are refused financial products like travel insurance for no better reason than the date on their birth certificate.”
The fact that the Equality Bill still gives insurers the green light to look at age when pricing is also a concern.
Maxine Baker, travel insurance manager at moneysupermarket.com, says: "Brits turning 66 will be shocked to see an overnight hike in the cost of their travel insurance, with no further medical evidence to suggest they might be at higher risk.
"Now that the Equality Bill has sanctioned ‘appropriate age-based treatment', it means some travellers will continue to find their premiums rise considerably on their 66th birthday.”
But insurers justify the use of age-based pricing. Nick Starling, director of general insurance and health at the ABI, says that a ban would result in more expensive insurance premiums for all customers.
“Insurers would have insufficient information to fully assess the risk,” he explains. “Our research shows that 99% of older customers can obtain motor insurance, with 98% able to buy travel insurance.”
Insurance isn’t the only financial product that could be forced to adapt for the Equality Bill. Current accounts for the over 50s, student accounts and even children’s savings deals could also be forced to change.
The British Bankers’ Association (BBA) also warns that policy interventions such as the special ISA limit for the over-50s might not be possible if the Equality Bill becomes law.
Angela Knight, chief executive at the BBA, says: "There are sometimes good reasons for offering financial products to specific groups. Even the Treasury would seem to agree. And whilst we all agree that the pursuit of greater equality is a good thing, we must be very careful not to help some customers, only to disadvantage others."
Work and retirement
Anti-discrimination laws already exist for the workplace, but the Equality Bill aims to go further to ensuring discrimination is completely removed from work environments.
The government says that women are paid, on average, 23% less per hour then men, while disabled people are twice as likely to be out of work. People from ethnic minority backgrounds may also encounter discrimination, with this group nearly a fifth less likely to find work.
Harriet Harman, minister for women and equality, says: “Though we have ensured new rights and opportunities for disabled people, for women, black and Asian people and older people – there is still unfairness and discrimination to tackle. And this Bill will take the action necessary to tackle it.”
One of the most sensational measures in the Equality Bill is the proposed gender pay report. This would see companies with more than 250 employees forced to publish details of salaries to shine light on gender pay discrimination. Public-sector bodies with more than 150 members of staff will also have to publish the hourly rates of both male and female workers.
There are concerns that such 'red-tape' measures will be costly to businesses already struggling with the fallout from the recession.
In addition, some critics say the Equality Bill's aim to boost the proportion of female and ethnic minority staff could lead to recruiting firms using positive discrimination in favour of female and minority candidates.
David Frost, director general of the British Chamber of Commerce, says: “The Equality Bill will discourage job creation and make employers fearful of the recruitment process. We already know that half of small firms struggle to navigate employment law and this will just add to the problem."
But David Harker, chief executive of Citizens Advice, says it has seen a 17% increase in employment discrimination enquiries in the past year - and welcomes the Bill as giving extra rights to victims of discriminatory practices.
He adds: "Unfair practices make it difficult for legitimate businesses to compete. In times of recession, equality is more important than ever. It is essential that there is a level playing field and that we draw on everyone's talents."
The government also points out that it will not enforce gender pay reports before 2013, and will only go down this road if “sufficient progress on reporting has not been made”.
It also says it has no plans to make positive discrimination legal.
People who care for elderly relatives will also be offered greater protection in the Equality Bill, with employers banned from refusing to promote a member of staff just because he or she cares for an older relative.
Age Concern and Help the Aged also want the government to tackle the national default retirement age in the Equality Bill, claiming that allowing companies to force people to retire when they turn 65 is “outmoded”.
“Many politicians and employers have already recognised that a national default retirement age no longer makes sense and the majority of the public want to see it abolished too,” says Mitchell.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
Association of British Insurers
Established in 1985, the ABI is the trade body for UK insurance companies. It has more than 400 member companies that provide around 90% of domestic insurance services sold in the UK. The ABI speaks out on issues of common interest and acts as an advocate for high standards of customer service in the insurance industry. The ABI is funded by the subscriptions of member companies.