Despite changes in the law to provide for greater equality, there is still no requirement on occupational pension schemes to provide the same benefits to surviving same-sex spouses and civil partners as they provide to opposite-sex spouses. In this blog post we will look at the current rules governing survivor benefits for opposite-sex spouses, same-sex spouses and civil partners and whether full equality may be imminent.

Opposite sex spouses

Most schemes provide for a pension to be payable to an opposite sex spouse in the event of a member’s death. For a defined benefit (DB) scheme this is often expressed as a proportion of the pension which would have been payable to the member. In addition, there are certain minimum requirements which apply to contracted-out schemes.

Civil partners

The Civil Partnership Act 2004 came into force on 5 December 2005 and allows same-sex partners to enter civil partnerships. Surviving civil partners must be treated in the same way as spouses for the provision of death benefits, but only in relation to pensionable service after 5 December 2005[1] (or 6 April 1988 in respect of contracted-out benefits).

Same sex spouses

In general, the Marriage (Same Sex Couples) Act 2013 has ensured that same-sex married couples are entitled to have the same legal rights as opposite-sex married couples. However, this does not extend to survivors’ benefits provided under occupational pension schemes. Same-sex spouses will be entitled to the same benefits as civil partners, in that schemes can restrict death benefits to service from 5 December 2005 (or 6 April 1988 in respect of contracted-out benefits). 

Home Office justification

The Home Office’s justification for this different treatment has been that it will cost millions of pounds for schemes to provide equal benefits in respect of service 2005. They have also estimated that two-thirds of DB schemes have voluntarily opted to pay the same survivor benefits to spouses, civil partners, unmarried partners and same sex couples. 

What is the future for survivor pension benefits?

There are currently three reasons to think that changes may be made to this area of the law:

1. TUC Statement – The Trades Union Congress issued a statement on 25 June 2015 urging the Government to remove all exemptions from the anti-discrimination legislation in this area and make all spouses and civil partners equal for the purposes of calculating survivor benefits.

2. Walker v Innospec Ltd [2]

On 29 – 30 June 2015 the Court of Appeal heard an appeal in the above case. Mr Walker contributed to his DB scheme for 23 years. However, if he predeceases his civil partner, his partner will only be entitled to a pension of £500 per year, compared to £41,000 per year if Mr Walker had been married to a woman.

At first instance the Employment Tribunal ruled that this was direct discrimination and that it was unlawful for pension schemes to provide unequal benefits to civil partners. However, on appeal by Innospec, the EAT overturned the decision and ruled that the exception in the Equality Act was compatible with the Equal Treatment Framework Directive[3]. This is because the Directive does not have retrospective effect in relation to inequalities that arise on the basis of sexual orientation before the date it was adopted into national law.

We now await the Court of Appeal’s judgment.

3. Government review

Criticism of the current inequality caused the Government to produce a Review of Survivor Benefits in Occupational Pension Schemes. Although this was published on 26 June 2014, no changes to the current law have been proposed as the Government is reviewing the findings carefully before it makes a decision. It is now unlikely that a decision will be made before the Court of Appeal’s judgment in Walker v Innospec Ltd is published.

What could you do?

Check and familiarise yourself with the benefits provided to same sex spouses and civil partners in your pension scheme rules and whether there is any potentially discriminatory treatment. If you have any queries or questions regarding this then we would recommend seeking legal advice. The Walker v Innospec Ltd case will have a big influence on this area of law so we advise keeping up to date with that and any subsequent changes announced by the Government.

This post was edited by Stephen Maynard. For more information, email blogs@gateleyplc.com.

[1] Paragraph 18, Schedule 9 of the Equality Act 2010

[2] UKEAT 0232/13/1802

[3] (2000/78/EC)

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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.