In a landmark ruling, overturning the decision of the Court of Appeal, the Supreme Court has ruled that the same-sex spouse of a pension scheme member will be entitled to the same survivor’s pension as an opposite-sex spouse of a member. The lower courts had concluded that restrictions in equality legislation limiting same-sex survivors’ pensions were valid: the Supreme Court did not agree.
Facts of the case
Mr Walker worked for Innospec Limited and was a member of the company pension scheme throughout his employment, from 1980 to 2003. He entered into a civil partnership and subsequently marriage with his partner as each status was introduced for same-sex couples. Mr Walker asked Innospec for confirmation that his then civil partner, now husband, would receive a full spouse’s pension. Innospec refused. Despite EU law requiring equality of treatment in matters relating to employment, there is an exemption in the Equality Act 2010 (which implemented the EU law) which restricts the application of this non-discrimination requirement, permitting the limiting of a spouse’s pension in such circumstances to reflect only the member’s period of pensionable service on or after 5 December 2005 (the date on which civil partnerships were introduced).
The difference between a spouse’s pension, had Mr Walker been married to a woman, and the pension payable to his husband could be in the region of £44,700 a year.
Mr Walker claimed in the employment tribunal and subsequently the courts that Innospec’s decision discriminated against those in same-sex relationships. The Court of Appeal ruled that the entitlement of Mr Walker (and his husband) had to be judged by reference to the EU law in force at the time of his pensionable service. As same-sex couples could not enter into civil partnerships or get married before 5 December 2005, the entitlement to a survivor’s pension could not extend to pensionable service completed before that date. We reviewed this decision in our post on 8 October 2015.
The Supreme Court’s view
The Supreme Court disagreed with the Court of Appeal’s conclusion. In its view, the spouse’s pension payable to Mr Walker’s husband (provided they remained married at the date of Mr Walker’s death) should be calculated based on the entirety of Mr Walker’s pensionable service, not just his service on and after 5 December 2005. The Court stated that the non-discrimination of same-sex partners is a principle of EU law and so denying Mr Walker a spouse’s pension based on all his years of pensionable service is incompatible with EU law.
What does this mean for pension schemes?
In light of the decision, the Government will have to consider whether the restriction on payment of survivors’ benefits to all same-sex couples, including civil partners, should be removed. Mr Walker and his husband are married – another case is looking at similar facts relating to a pension scheme member in a civil partnership and it will be interesting to see whether the legislative position is changed before that decision is published.
Trustees should be mindful of the Supreme Court’s decision where their scheme rules incorporate a restriction on the spouse’s pension payable to survivors who were in same-sex relationships and take legal advice on their obligations.
For further information, or for any questions relating to the above, please contact:
Michael Collins, partner, Pensions
T: 0121 234 0236