Ian Neale reflects that the removal of age discrimination in pensions is still an ongoing process.  

This week marked the 25th anniversary of the reunification of the people of Berlin. Meanwhile, another wall is dividing people in Palestine; this one will probably still be there in 2016 when we observe the 100th anniversary of the Sykes-Picot Agreement.

Two diplomats, one British and the other French, drew lines on a map of the Middle East to decide the future of those who had been living under Ottoman control. The reverberations of their arbitrary definition of new states and their borders, above all in Iraq and in Syria, dominate the news to this day.

Other peoples too have been unfairly divided by high-handed interventions of third parties; notably in Africa. Nobody today should be oblivious to the causes of resulting ongoing conflicts, and yet as the Spanish philosopher George Santayana famously wrote, 'those who cannot remember the past are condemned to repeat it'.

Arguably, one lesson from history is that artificial barriers should not be erected unless a compelling reason is discerned by at least one - preferably both - of the sets of people to be thus divided.

Occasionally the egregious absurdity becomes obvious and the wall comes down. In the world of pensions, recent UK governments have created a single tax regime, sweeping away the byzantine complexity of the pre-A Day landscape. Significant awkward divisions remain, however, contradicting Alan Pickering's plea twelve years ago for recognition that 'a pension is a pension is a pension'.

We have occupational pensions and personal pensions, both of which can be 'workplace pensions' in modern DWP parlance. It's not just confusing; it costs us too.

Then there are the consequences of crossing the lines. Again, some recent advances have mitigated awful 'cliff-edge' effects, such as the automatic annuitisation of occupational money purchase pensions when a member reached normal pension age. The future is flexible.

One remaining border line is a matter of individual age. In general it is against UK law to discriminate between people on grounds of their age - or on other criteria too, such as gender; quite rightly, most of us would agree. Yet in pensions, it still makes a deal of difference to your rights if you have attained age 75.

Before A-Day, the 75th birthday was the deadline for most pension scheme (ie 'post-89') members to have taken their benefits. That cliff-edge has gone - you can delay vesting as long as you wish - but any remaining uncrystallised benefits are tested against the lifetime allowance at that date.

Suppose you want to carry on saving in a pension scheme past age 75; what forms of age discrimination might you encounter? The first is that you are denied tax relief on contributions. That is thought to be under review by HMRC and the Treasury; but so has been - for some years now, without result - the unworkable legislation governing the calculation of a dependant's scheme pension where the member dies after attaining age 75.

New flexibility rules in the Taxation of Pensions Bill currently before Parliament include significant relaxations about death benefits, notably that from April 2015 unused pension benefits can be passed on to anyone the member nominates, after their death - and tax-free if death occurs before age 75.

Should the member die on their 75th birthday or later, it makes a huge difference: the government will still take a big chunk of money away. Presently the tax charge amounts to 55%, for lump sums paid from next April it will be 45%, and then a year later it is expected to be taxable at the marginal rate of the recipient.

Is that fair, or even workable? Are such arbitrary dividing lines justified, and if so by whom? If artificial lines must be drawn, on what criteria? In the age of equality, we are moving in the right direction but still have work to do.

Written by Ian Neale, Director, Aries Pension & Insurance Systems Ltd.